- The People’s Bank of China agreed to PayPal’s buyout of a majority stake (70%) in the local payment company, GoPay.
- Goal: enter the Chinese market where mobile payment has managed to take off.
- PayPal is the first foreign payment solution to be granted a licence for featuring e-payment services in China.
- This buyout will be conducted via Yinbaobao Information Technology, PayPal’s Shanghai-based subsidiary.
- GoPay was launched in 2011 after a Joint Venture between the Chinese conglomerate, HNA Group, and China International Commerce Center (CIECC). This company enjoys licences enabling them to process online, mobile and cross-border transactions. Their services are meant for e-merchants and airline companies.
- This acquisition is expected to close by the end of the year. No information has been disclosed as to its amount.
- High potential market. PayPal lands on the Chinese mobile payment market, which could be worth $96 billion in 2019. According to a report by Frost & Sullivan, it could grow by 21.8% by 2023 and reach $96.73 billion. The number of active m-payment users is expected to increase twofold, in the meantime.
- Besides, China intends to build a cashless society. By 2020, cash payments may only represent 30% of all transactions: yet another opportunity for the US giant.
- But a monopolised market. PayPal will be facing competition from local players: WeChat (roughly 600 million users) and AliPay (450 million users) hold nearly 93% market share and are also aiming for Western markets, including Europe. These services are already present in more than 40 countries and regions.
- This isn’t PayPal’s first attempt at addressing China. In 2017, they teamed up with Baidu to be provided access to millions of Chinese e-purchasers.
- And PayPal isn’t the only American player focusing on China. A few months ago, American Express entered this country through a Chinese clearing programme. Other foreign players will then be aiming for this region in the near future.