PayPal First Foreign Firm to Get Chinese Payments License
Big news for the payments industry, PayPal has become the first foreign firm to get an online payments license in China after buying a majority stake (70%) in Guofubao Information Technology Co (GoPay). PayPal CEO, Dan Schulman, released a brief statement saying that the People’s Bank of China had approved the GoPay acquisition. He also revealed that the deal was set to close in the fourth quarter. The exact terms of the deal, which is expected to close at the end of this year, have not been disclosed.
Western companies have been pushing for ways into China’s enormous digital payments business for some time. China is the world’s second largest economy, with a rapidly growing middle class –which also means a growing market of consumers seeking lending, credit card and money transfers.
What is GoPay? GoPay is a small Chinese payments provider that functions similarly to PayPal; it allows merchants to accept non-credit card payments directly from their websites. GoPay also offers 55 payment methods, including card and bank payments. Featuring a global gateway, it also supports foreign currencies, including U.S. dollars, Euro, British pounds, Polish zloty, Hungarian forints, Romanian lei, Bulgarian leva and Croatian kunas.
This recent breakthrough has been a slow process. Although the Chinese government has opened the door to foreign firms to start applying for licenses to launch payments networks in the country, the approval process has been anything but fast and straightforward. PayPal has managed to overcome this challenge by taking on majority ownership of GoPay; this ultimately gave PayPal access to the Chinese firm’s license to provide online payment services.
“We look forward to partnering with China’s financial institutions and technology platforms, providing a more comprehensive set of payment solutions to businesses and consumers, both in China and globally,” PayPal CEO Dan Schulman said in a statement on LinkedIn.
The payments industry as a whole is now waiting to see how the process of breaking into the Chinese market goes for PayPal. While the processing of digital transactions are estimated to total in the trillions, it may not be an easy market to break into. Chinese digital payments services Alibaba (BABA)’s AliPay and Tencent (TCEHY)’s WeChat Pay have dominated the market for some time.PayPal plans to offer online, mobile and cross-border renminbi payments.
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Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the complex world of merchant accounts. He also writes non-fiction, on subjects ranging from personal finance to stocks to cryptopay. He enjoys eating pie in his backyard porch, as should all right thinking people.