Paypal earns a Chinese Payment License after it gains a 70% stake in Guofbao Information Technology Co (Go Pay). Thus, they have become the first foreign platform that provides online payment services in China.
In a statement by PayPal’s CEO, Dan Schulman, he disclosed that the People’s Bank of China has approved the GoPay acquisition.
The statement reads: “The People’s Bank of China has approved PayPal Information Technologies Co., Ltd.’s acquisition of a 70% equity interest in Guofubao Information Technology Co. (GoPay), Ltd., a holder of a payment business license in China. We are honored to become the first foreign payment platform to be licensed to provide online payment services in China. 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. The transaction is expected to close in the fourth quarter of 2019 and is subject to customary closing conditions.”
The acquisition has however made Paypal, the US-based payment provider, the first foreign platform in China. Considering how the Chinese financial market hardly accommodated foreign-based companies, this gives PayPal a chance to secure a spot in their rapid growing financial market.
Why this matters
This acquisition has totally opened a new market for PayPal. This new lucrative market has its significant benefits:
- Paypal’s entrance into the Chinese financial market is a huge expansion for them. The acquisition is set to open new opportunities for Paypal, especially considering how rapidly the Chinese market is growing.
- The China’s payments market is expected to grow over 96 trillion dollars by 2023. So, with this new entrance, PayPal has opportunity to secure spot.
- The demand for e-commerce is becoming increasingly high and plays an important role in the Chinese financial market. The acquisition makes it benefitting for PayPal, as the number of mobile payment users is expected to increase massively and reach 956 million by 2023.
Though China’s payments market is led by local players, including ewallet providers like Alipay and WeChat Pay on the mobile side, there is still plenty of room for it to grow which would benefit PayPal.