As western companies jockey for a way into China’s enormous digital payments business, PayPal has finally clinched a license to provide digital payment services in China, following its acquisition of a majority stake in a Chinese payments company.
The People’s Bank of China has approved PayPal’s acquisition of a 70% equity stake in GoPay (Guofubao Information Technology Co. Ltd.), which will make PayPal the first foreign payment platform to provide online payment services in China, TechCrunch reported.
GoPay has licenses for online and mobile transactions, and mainly provides payment products for industries including e-commerce, cross-border commerce, aviation tourism and others.
According to a statement from Guofubao, PayPal acquired the controlling stake through the Shanghai-based subsidiary Yinbaobao Information Technology (Shanghai) Co. Ltd., TechCrunch reported.
The companies did not disclose deal terms.
The news of PayPal’s entry into China comes at a time when there’s increased tension between the US and China, with The White House reportedly now considering curbing some US investments in China amid the trade dispute between the countries.
Though China’s payments market today is led by local players, including eWallet providers like AliPay and WeChat Pay on the mobile side, there’s still plenty of room for it to grow — which would benefit PayPal.
On the mobile payments side alone, the market is expected to grow 21.8%, from 2017 to US$96.73 trillion in 2023, driven partly by increasing demand for e-commerce, a report from Frost & Sullivan found.
The market has also seen an increase in cross-border transactions, particularly in sectors like e-commerce, travel and overseas education. These reached US$6.66 trillion in 2016.
The report additionally said the total number of active mobile payment customers is expected to reach 956 million by 2023, up from 562 million in 2017.
According to CNN, only one other American company has successfully made inroads in the market. Last year, American Express received preliminary approval from the PBOC to start building out a domestic clearance and settlement network through its joint venture with Chinese partner LianLian group.