Yeahka touts overseas transaction surge. But where are the profits?

The electronic payment service provider said its overseas payment volume more than quadrupled in the first three quarters of this year

Key Takeaways:

• Yeahka’s overseas gross payment volume surged more than 300% year-on-year in the first nine months of this year
• However, such rapid volume growth in an early-stage business segment rarely translates to profits due to the need for heavy capital outlays

By Warren Yang

For Chinese financial companies looking for relief from a subdued domestic economy and jittery regulators quick to act at any signs of trouble, packing up and heading overseas has become an obvious new direction. But as Yeahka Ltd. (9923.HK) is discovering, moving beyond a sluggish home market doesn’t guarantee smoother sailing abroad.

The electronic payment services provider has spent the past year doubling down on international expansion through its YeahPay brand, attempting to build commercial momentum across target markets in Southeast Asia, Japan and the West. Yet investors seem unconvinced about this pivot. Yeahka’s stock has lost more than half of its value this year, indicating that global ambitions alone are not enough to reignite investor enthusiasm without clear signs that strong transaction volumes abroad are filtering down to the company’s bottom line.

In its latest business update issued last Thursday, Yeahka touted explosive growth for the operational metrics in its global push. The company’s overseas gross payment volume (GPV) surged more than 300% year-on-year to 11.4 billion yuan ($1.7 billion) in the first nine months of this year.

Numbers like these look impressive but can disguise a hard truth: rapid volume growth in an early-stage business segment rarely translates to a net profit. Underscoring that, Yeahka didn’t provide any metrics, such as margins or profits for the overseas business. In all likelihood, that’s because there was nothing upbeat to report in that regard.

Building international scale requires heavy ongoing capital outlays to secure regulatory licenses, build local compliance frameworks, and absorb high customer acquisition costs. And high volumes are hardly impressive if profit margins are razor thin or a company even loses money on each transaction as it builds the business. Investors seem to know better than to take the flashy figures at face value, given that Yeahka shares actually fell the day after the disclosure.

Yeahka’s latest detailed results for the first half of this year provide a clearer picture of what’s happening. During the six-month period, despite rapid growth in its international payment volume, Yeahka’s total revenue fell 23.9% year-on-year to 1.25 billion yuan ($187 million) because the company still relies heavily on the domestic market. Its overseas GPV through the third quarter of this year is a fraction of the 880 billion yuan figure it logged in China during the first half of the year.

And challenges abound in China. On the economic front, consumer spending is sluggish, depressing transaction volumes. Small and medium-sized merchants, the primary customer base for Yeahka’s QR-code payment terminals and software as a service (SaaS) products, have seen their business slow as consumers grow cautious about their spending.

Reflecting this broader slowdown, Yeahka’s domestic GPV dropped 23% year-on-year in the first half. To defend its margins against shrinking revenue, the company was forced to cut administrative and R&D expenses. That belt-tightening helped it grow its net profit 1.3% year-on-year during the period, despite the steep revenue drop.

Compounding the economic headwinds is an ever-tightening regulatory environment. While Chinese regulators have largely concluded a major structural overhaul of consumer lending platforms, third-party payment service providers like Yeahka face ongoing supervision. The People’s Bank of China (PBOC), the country’s central bank, maintains strict requirements for cross-border capital settlements, merchant verification rules, transaction fee caps and data security. The cumulative cost of compliance leaves service providers with thin margins and limited scope for profit expansion.

Against this backdrop, international expansion is an obvious strategic choice. Yeahka initially laid the groundwork for its international expansion in 2021 by securing key regulatory approvals across major financial hubs, including Hong Kong and Singapore. Its international push accelerated in early 2024 with the formal consolidation and scaling of its global one-site payment brand, YeahPay. A significant part of the business is aimed at Chinese traveling abroad, allowing Yeahka to take advantage of its strengths and relationships in China.

Structural hurdles

But attempts to crack overseas markets introduce a completely different set of structural hurdles. For one, fintech giants like Stripe and Adyen are deeply entrenched in markets outside China, alongside established regional banks and other financial institutions. And onboarding merchants requires localized sales teams, region-specific licensing, and multi-currency clearing infrastructure, each of which incurs costs that eat into profit margins.

Working with local incumbents — instead of competing directly with them — can lower some of these hurdles. In its latest business update, Yeahka said is now collaborating with some big names like Stripe. While these partnerships grant quick access to global and local payment networks, they are not a silver bullet for profitability. Relying on third-party infrastructure requires Yeahka to share transaction processing revenue with its partners, cutting into the money it gets for each transaction.

Management has pointed out that the company is charging more overseas than at home, reflecting the ultra-competitive and highly regulated state of financial services in China. Yeahka highlighted that its overseas payment fee rates remained lucrative at more than 0.6% of transaction values, about four to five times the rates it gets in China.

But the fee premium is largely offset by international processing complexity. Unlike domestic payments, cross-border transactions involve fees to international card networks, foreign exchange management costs, and revenue shares with global partners. And then, there are local marketing and regulatory compliance expenses. After all these costs, Yeahka is probably left with little in the way of profits.

And worse, the company’s overseas fee rates seem under pressure, falling from 0.67% of each transaction value in the first half of 2025 to 0.63% a year later. That translates to lower margins, which is inevitable as Yeahka scales to take merchant accounts from global companies and local banks.

In the absence of investor enthusiasm about the global expansion, the company has been buying back shares as a short-term remedy to shore up its stock. Yet this type of financial engineering probably can only go so far as it doesn’t address issues related to Yeahka’s business. The company’s shares trade at a trailing price-to-earnings (P/E) ratio of about 13, well below 21 for cross-border emerging-market processor DLocal Ltd. (US.DLO).

This valuation gap will likely remain until Yeahka demonstrates that its seemingly large international transaction volumes can generate sustainable, high-margin profits to offset a contracting business at home. If the company fails that, investors will not view its global push as a victorious new growth engine, but instead as an expensive foray into a highly competitive – and not necessarily profitable – sector.

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