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.