People’s Bank of China (PBOC), the state-owned bank, gave the nod to Paypal Holdings Inc (NASDAQ:PYPL) to acquire a stake of 70% in GoPay. Paypal would become the first International Company to get the license for payment processing in China. The company would acquire the majority stake in GoPay through a China-based subsidiary – Yinbaobao. It would close the transaction in Q4, 2019.
It is on the backdrop of the announcement of PBOC to open up its domestic market to overseas payment companies to ensure healthy competition. PBOC has given the nod to American Express to launch operations in China in November 2018. However, Paypal becomes the first international company to begin online payment processing in China.
To offer comprehensive payment solutions
Dan Schulman, Chief Executive Officer of Paypal, said the company is pleased to become the first overseas payment platform to receive the license for online payment services in China. To offer more comprehensive payment solutions to consumers and businesses both worldwide and in China, the company would partner with technology platforms and financial institutions in China.
The US has been persuading China to open up its market to foreign players during the trade talks. The central bank – PBOC said it would give equal treatment to international and domestic players alike. Other companies vying to enter the Chinese market since 2017 are MasterCard and Visa.
Paypal previously partnered with Baidu in 2017 as part of its global reach and to target the tourists of Chinese origin abroad. The partnership makes way for the acceptance of the Baidu Wallet by over 15 million merchants of Paypal across the world.
Online payments market in China
The total value of online transactions in China doubled to $200 trillion in 2018 when compared to the previous five years. Other prominent companies operating in the online payments segment in China are Ant Financial. It has become the most extensive online payment platform in the world overtaking Paypal way back in 2010.
To fulfill its aspirations for global payments, Ant Financial planned to take over WorldFirst, a UK based company engaged in cross border payments. The US has blocked its earlier move to acquire MoneyGram.