LianLian: the stealth Chinese fintech

Written by Kapronasia || May 16 2024

Those who do not follow China’s payments sector closely may not have heard of LianLian Digitech, a Hangzhou-based fintech firm that presides over an ascendant cross-border payments network and counts among its strategic partners American Express. LianLian has leaned hard into market segments not dominated by the traditional Chinese payments duopoly of Alipay and Tenpay, whether by partnering with a global card giant like Amex on renminbi clearing in China’s domestic market or by capitalizing on a growing appetite among China’s e-commerce sector to do business overseas.

According to its official website, LianLian was established in 2003, which makes it even older than Alipay (established in 2004) as well as any Tencent payments platform. However, LianLian’s earliest business scope is not well known. It emerged as a company to watch in China’s payments sector when it teamed up with Amex for the first time – in 2012. That tie-up involved Amex making a US$125 million equity investment in LianLian Pay, the Chinese company’s e-wallet and a partnership involving the then-Amex digital wallet Serve. While Serve has vanished into obscurity, the Amex-LianLian partnership has endured, and the two companies’ joint venture received a renminbi clearing license in June 2020, making the Amex the first of the three U.S. card giants to obtain a license allowing it to process domestic transactions.

Meanwhile, LianLian’s cross-border payments business has been growing briskly. It now has 64 payment licenses and relevant qualifications, covering seven major markets, among them Hong Kong, Mainland China, Singapore, the United States, the United Kingdom, Thailand, and Indonesia. In its annual report published May 8, LianLian said that in 2023, its number of active customers reached 1.3 million, a year-on-year growth of 51%, while total payment volume rose 74% year-on-year to RMB 2 trillion.

The company’s financial performance in 2023 was also solid. Its overall revenue grew 38% year-on-year to RMB 1.03 billion, while its gross profit margin was 56%. Looking at its different payment services, global payment revenue grew by 37% to RMB 660 million, while domestic payment revenue rose 44% to RMB 220 million and value-added services revenue increased by 47% to RMB 130 million.

LianLian’s strong, stable growth in recent years makes it an outlier in China’s fintech sector, where tech giants like Alipay have been struggling to restructure amid heavy regulatory scrutiny. We think that LianLian’s focus on payments has been crucial to its strong performance. The company has not – at least not overtly – tried to grab market share in retail banking, wealth management and other segments of financial services where regulators see their presence as aggravating risk. In contrast, payments is a segment where China’s regulators continue to see an important role for fintech firms.