ALIPAY, China's largest third-party payment company, has agreed to acquire a payment vehicle of Oncard International to gain access to airlines, including Cathay Pacific Airways, Dragon Air and EVA Airways.

With the purchase, Alipay will provide domestic passengers with online and telephone ticket-payment services, the company said yesterday.

"After the acquisition, we can introduce Oncard International's experienced team as well as provide service to international airlines," said Eric Jing, chief financial officer of Alipay. "Alipay's cross-border business will be raised to new heights through integration of the two companies."

It has been the first publicly announced merger and acquisition deal of a third-party payment firm after the People's Bank of China started to issue licences for non-financial institutions to handle such services in May. Forty institutions have received the licence so far.

Peter Abotomey, CEO of Oncard International, said that selling the payment vehicle will enable the company to focus on the bonus points business in China.

"Oncard International wishes to maintain close cooperation with Alipay, and establish further and deeper relations," Abotomey added.

Analysts said the takeover will strengthen Alipay's position in the airline market and will help the firm expand overseas. An analyst also forecast that M&As will be a trend for firms handling third-party payment services.

"Companies with the licence will have to merge with other firms to expand their business range to prepaid card services and international payments," said Zhang Meng, a researcher at Analysys International.

China's online payment market was worth 460.9 billion yuan (US$72.3 billion) in the second quarter of this year.