PayPal has become the first foreign company to enter the Chinese Payments market. PayPal achieved this feat by acquiring 70% equity interest in Guofubao Information Technology Co. (GoPay), Ltd., a holder of a payment business license in China. Both companies did not disclose the acquisition figure.
This is an interesting development bearing in mind the tension between US and China, which at one time led to a US ban on China and Huawei not able to launch the Huawei Mate 30 with Google apps.
This deal comes after two years of promises from Beijing that its financial services industry would be opened to overseas companies.
Visa and Mastercard are still waiting on the sidelines for licence approvals, despite rules in 2017 removing formal obstacles to market access.
In December 2011, Guofubao was granted the Internet payment and mobile phone payment service license by the People’s Bank of China, the fund payment business license in 2015, the cross-border RMB payment business license in 2016, and the prepaid card issuance and acceptance business in 2016. The company mainly provides payment products and industry supporting solutions for e-commerce, cross-border commerce, aviation tourism and other industries.
Paypal is the world’s leading third-party payment company, covering more than 200 countries and regions around the world, with more than 286 million active payment accounts and supporting more than 100 currency transactions worldwide.
PayPal is entering into a market dominated largely by two main players – Tencent, which runs WeChat Pay via its social-messaging platform, and Alibaba, whose payments affiliate Ant Financial owns Alipay.
According to Central bank’s figures, third-party online payments in 2018 grew 45 per cent in value to Rmb208tn ($29tn) from the year before.
PayPal launched in India in late 2017, where it is also playing catch-up against mobile payments services from Alibaba, Walmart, Google, Amazon and Facebook.
PayPal said the transaction is expected to close in Q4 2019 and is subject to customary closing conditions
