PayPal has acquired a controlling stake in a Chinese payments provider in a deal that will see it compete with services like AliPay and WeChat Pay. The news comes just as the Trump administration is considering curbing US investments in China.
Recently, Paypal got the green light from state-owned People’s Bank of China to acquire a 70 percent stake in GoPay – one of the key players in the region. This is a significant development, as it marks the first time an international payment platform has managed to penetrate the Chinese market. And since eBay dropped PayPal as its main payment provider last year, the acquisition could play a big role in its global expansion.
The exact terms of the deal are unknown, but the paperwork should be ready by the end of the year. According to a statement on GoPay’s website, PayPal is doing this through one of its local subsidiaries, Yinbaobao. GoPay has been operating since 2011, providing online and mobile payment products for e-commerce.
PayPal will have to compete with powerful local e-Wallet providers, most notably Alibaba’s AliPay and Tencent’s WeChat Pay, the latter of which focuses on mobile payments. Still, the Chinese market for digital transactions is estimated to grow to over $96 trillion in 2023, mainly due to the popularity of mobile payments – an estimated 40 percent of all Chinese people who own a phone live cashless lives. Analysts expect there will be more than 956 million of them in 2023, so there’s a lot of room for PayPal if it plays its cards right.
Mastercard and American Express have also tried to enter China before, but only the latter was able to get a preliminary approval, so it can only hope to launch its services next year. It’s worth noting that PayPal scored an important win, as the Trump administration is reportedly looking to curb US investments in China amid an ongoing trade war.