PayPal has bought a majority stake in Chinese payments group Guofubao (NationPay), and has acquired a payments license in the country, according to a report by the Financial Times.
PayPal bought a 70 percent stake in the company for an undisclosed amount, and the country’s central bank approved the deal. This means that PayPal is the first outside country to become a part of the payments market in the country in the two years since Beijing said outside countries would be eligible.
The move has been building for a while. During trade talks, the United States has been trying to convince China to allow it more market access, and the central bank said that it was going to allow for “equal treatment” for domestic and foreign groups alike. Among the companies that have been trying since 2017 to get access are Visa and Mastercard.
The rules state that the central bank has to decide on applications from foreign companies inside of 90 days of acknowledging them. The People’s Bank of China (PBoC) is the biggest shareholder right now in China UnionPay, which is the biggest provider of renminbi bank-card payments.
The new deal will give PayPal the ability to offer a slew of services through NationPay, including the issuing of debit cards and cross-border renminbi payments, both online and mobile. The online payment market in China is growing rapidly and right now it’s controlled by two huge companies: Tencent and Alibaba. Tencent runs WeChat Pay through a messaging platform and Alibaba is affiliated with Alipay.
Central bank numbers illustrate the high level of growth in the field: third-party online payments ballooned 45 percent last year to $29 trillion from just a year before.
“China’s domestic payments industry has great opportunities but the obstacles that foreign companies will face are not small,” said Dong Ximiao, a chief analyst at Zhongguancun Internet Finance Institute.
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