Guotai Haitong: Payment companies show signs of marginal improvement, with cross-border and AI becoming new highlights.

Guotai Haitong released a report stating that the turning point in the payment industry has emerged, with leading payment companies benefiting from a contraction in licenses and an increase in market share, as well as rapid development in cross-border and payment+ businesses. In domestic acquiring, the focus is on leading institutions with outstanding compliance advantages, an upward trend in card transaction volumes, and a continuous increase in market share; in cross-border operations, companies with a complete license matrix, advanced local operations, and strong ties with international e-commerce and card organization ecosystems are favored; for payment+, companies that are the first to implement AI products, those capable of upgrading payment channels to "payment+SaaS" services, and those proactively positioning Agent payment infrastructure are more highly regarded. The main points from Guotai Haitong are as follows: The payment industry is improving at the right time, with traditional acquiring businesses benefiting from consumer stimulus and license contraction. Acquiring revenue is driven by both transaction volumes and fee rates, and both aspects are currently at a turning point: On the fee side, the central bank continues to revoke payment licenses and is no longer issuing new ones, leading to an accelerated exit of non-compliant small and medium-sized institutions, which is expected to improve the market share of leading institutions. At the same time, vicious price competition is being contained, enhancing the bargaining power of leading institutions and providing hope for industry fee rates to stabilize or even marginally rise, thereby supporting the recovery of profit levels. On the transaction volume side, policies to promote consumption, such as interest subsidies for consumer loans, have been continuously strengthened, resulting in a positive growth for card consumption after seven consecutive quarters of negative growth in the first quarter. Acquiring businesses for card payments are stabilizing and rebounding, and the QR code payment business is growing rapidly. Increased inbound and outbound consumption, along with the development of the DIGIHUMAN digital RMB, stimulates payment companies to expand into cross-border operations. The cross-border payment market has a vast space and continuously releasing growth momentum, with e-commerce, inbound consumption, and personnel cross-border movement collectively driving market expansion. The DIGIHUMAN digital RMB further opens up incremental space: its point-to-point real-time clearing characteristics can address the pain points of traditional cross-border payments, which are often inefficient and costly, reducing the entry costs for payment institutions into cross-border clearing channels and providing support for innovative businesses like cross-border acquiring. Additionally, the profitability and competitive landscape of cross-border operations are significantly better than those of domestic operations: the average fee for cross-border payments is higher than that in the domestic payment market; furthermore, the barriers to entry in terms of licenses, clearing, and compliance remain high, limiting the number of participants and resulting in a blue ocean market landscape. Leading companies are already seeing the benefits of their overseas expansion strategies, with cross-border transaction volumes growing rapidly, and those with a leading position in license matrices and e-commerce and card organization ecosystems are expected to continue capturing incremental market share, thereby nurturing cross-border payments as a second growth curve. AI is empowering the entire payment chain, reshaping business models through differentiated competition and SaaS revenue. AI Agents are becoming a new transaction entry point. According to Research Intelo, the global AI payment market is expected to achieve a CAGR of 24% from 2026 to 2034. Payment companies' AI initiatives have now covered the entire chain from terminals to operations and risk control, with three main paths to value realization: First, AI products create a generational difference in service experiences, promoting an increase in market share. Second, integrating AI operational tools into merchant operations can be converted into subscription-based SaaS revenue, with gross margins significantly exceeding those of the core payment business, forming a second growth curve. Third, the Agent economy is generating demand for ultra-small and high-frequency payments among machines, unlocking a new commercial model blue ocean in micropayments. The payment industry has cyclical characteristics, and expectations about fundamentals affect valuations; currently, a turning point in fundamental improvement has emerged. Historically, whether driven by policy or catalyzed by events, such changes have acted by altering market expectations about fundamentals. The payment industry is currently benefiting from policies, showing marginal improvements, while cross-border payments and AI+ have become new event catalysts, indicating a prominent cost-performance ratio for investments. Risk warnings: Consumer recovery is not as expected; industry competition is intensifying; AI technology deployment may not meet expectations.