How Lakala’s Dual‑Wheel Strategy Fuels 2025‑2026 Growth in China’s Payment Landscape

1. Dual‑Wheel Business Model

Lakala’s revenue is driven by two complementary wheels. The first wheel is the traditional digital payment business, which in 2025 generated a domestic comprehensive acquiring transaction amount of 3.94 trillion CNY , placing it in the top tier of the industry. Breakdown:

Bank card transactions: 2.47 trillion CNY

QR‑code transactions: 1.47 trillion CNY (year‑over‑year growth 7.90%)

According to People’s Bank of China data, total mobile payments in 2025 reached 571.97 trillion CNY, meaning Lakala captured nearly 0.07 % of the market, a share that is higher in the acquiring sub‑segment.

The second wheel is Lakala’s technology‑service segment. In 2025 it earned 4.08 billion CNY , up 44.05% YoY, with an extraordinary gross margin of 76.26 % . By Q1 2026, tech‑service revenue rose to 1.11 billion CNY , a 93.81% increase, confirming the “payment + SaaS” strategy is delivering real cash flow.

2. International Expansion

Lakala’s cross‑border payment volume in 2025 was 889 billion CNY , up 80.69% YoY, serving more than 210,000 merchants (73.99% growth). External‑card acceptance grew 117% YoY, with active merchants up 43.5% and coverage in 300 cities . The company now operates a payment network in 129 countries and regions , a strategic asset for future growth.

3. Porter’s Five Forces Analysis

The article applies Michael Porter’s model to assess Lakala’s competitive position:

License barrier: Payment licences are scarce and hard to obtain.

Technical barrier: Maintaining trillion‑level transaction processing, risk control, and settlement systems requires deep engineering and capital.

Channel barrier: Millions of POS installations and long‑term merchant relationships create a high switching cost.

Capital barrier: Large reserve funds are needed for settlement liquidity.

These combined barriers form a near‑impregnable moat, especially as the industry shifts from a fragmented “hundreds of players” era to a concentrated “head‑to‑head” stage.

4. Data Highlights

Key financial figures illustrate Lakala’s strength:

2025 revenue: 55.47 billion CNY (≈ 2× competitor Yirong’s 33.11 billion CNY).

2025 net profit: 11.71 billion CNY , EPS 1.51 CNY.

Q1 2026 revenue: 16.14 billion CNY , +24.20% YoY.

Payment business: 13.85 billion CNY (+20.06%).

Tech services: 1.11 billion CNY (+93.81%).

Domestic acquiring volume: 1.12 trillion CNY (+14%).

QR‑code volume: 414.7 billion CNY, +31% YoY.

5. Scale Economics and Network Effects

The article explains why scale is a strategic asset. With transaction volume in the trillions, marginal costs per transaction drop dramatically (e.g., a data‑center costing 1 billion CNY spreads to 10 CNY per transaction at 100 billion volume, but only 1 CNY at 1 trillion). Larger data sets improve risk‑control models, and low‑cost SaaS products generate exponential revenue as merchant count grows.

6. SaaS and AI‑First Roadmap

Lakala’s tech services include self‑developed SaaS for retail, finance, and data analytics. In May 2025 the company invested 2.5 billion CNY to acquire a majority stake in Tiancai Shanglong, a leading restaurant SaaS provider, creating a “scene‑complementary” ecosystem (payment + restaurant management). AI is embedded in three flagship products:

AI‑driven risk control (real‑time fraud detection).

AI business assistant (operational insights for merchants).

AI customer service (7×24 h intelligent support).

These AI capabilities boost service quality while keeping operating costs low, reinforcing the high‑margin tech‑service wheel.

7. Strategic Timing and Discipline

The author argues that Lakala’s success stems from early, disciplined moves rather than chasing hype. Early investments in QR‑code adoption, cross‑border capabilities, and AI (starting 2024) positioned the firm to capture emerging trends without over‑extending into unrelated areas such as P2P lending or speculative blockchain projects.

8. Conclusions

Lakala illustrates how a payment company can evolve from a low‑margin transaction processor to a high‑margin digital‑business platform by leveraging scale, network effects, SaaS extensions, and AI. The dual‑wheel model, combined with a robust international network and a clear focus on core competencies, creates a sustainable competitive advantage in an industry where “time is the ultimate moat.”

References (selected): Lakala Payment Co., Ltd. 2025 Annual Report; Lakala Payment Co., Ltd. 2026 Q1 Report; People’s Bank of China 2025 Payment System Statistics; Porter, M. (1979) *Competitive Strategy*; McKinsey MECE framework.