PayPal has become the first foreign company to acquire a payments license in China, after buying a majority stake in a Chinese payments group – Gopay. PayPal China
Guofubao (Gopay), a small Chinese online payments company, said on Monday that the central bank had approved PayPal’s acquisition of a 70 percent stake in the company for an undisclosed sum.
The deal makes PayPal the first foreign company to enter the Chinese payments market after two years of promises from Beijing that its financial services industry would be opened to overseas companies.
Gopay has licenses for mobile, online and cross-border yuan payment services, the Chinese company said in its statement.
The transaction is expected to close in the fourth quarter of 2019 and is subject to customary closing conditions, PayPal said.
Early last year, China’s central bank announced that it was opening the country’s domestic market to foreign third-party electronic payment firms, a move intended to promote competition in the retail payments industry, Reuters reports. PayPal China
China payment services PayPal China
The Chinese market is dominated by local payment services such as Alipay and WeChat Pay, which together account for the vast majority of digital payment transactions in the country.
Alipay, operated by Ant Group, and WeChat Pay, owned by Tencent, are both mobile payment platforms that allow users to make purchases and transfer money using their smartphones. Both services are widely accepted by merchants in China, including small businesses and street vendors, and are integrated with a wide range of other services, such as ride-hailing, food delivery, and e-commerce.
As of 2021, Alipay has more than 1 billion active users worldwide, while WeChat Pay has more than 900 million active users in China. These numbers are significantly higher than PayPal’s active user base, which was reported to be 403 million as of the end of 2020.
Other local competitors in the Chinese market include UnionPay, which is the country’s dominant credit and debit card payment network, and JD.com, which operates a popular e-commerce platform that includes its own payment service.
It’s worth noting that the Chinese digital payment market is highly competitive and rapidly evolving, with new players and technologies constantly emerging. Despite the dominance of Alipay and WeChat Pay, there is still room for growth and innovation in the market, and competition is expected to remain fierce in the coming years.