Global payment platform, PayPal Holding Inc incursion into the Chinese market has resulted in the company becoming the first foreign operator to have 100% control of a payment platform in China. This much was revealed by recent data emanating from the Chinese government, as the U.S. firm makes giant steps to have a greater foothold in the fast-evolving and booming market for online payments.

Last year, PayPal completed the takeover of the payment platform, GoPay by buying its remaining 30% stake, according to shareholder data from the National Enterprise Credit Information Publicity System.

The financial details of the deal weren’t disclosed in the data. The purchase came one year after PayPal bought the initial 70% stake in GoPay for an undisclosed amount at that time, which made it the first foreign company to enjoy such ownership privilege and licensed to provide online payment services in China.

At this time, PayPal is yet to give an official statement on the issue, as it declined to comment.

How this affects PayPal

The implication of taking total control of a company, albeit a small player, in the Chinese payment market is that PayPal has to compete with domestic heavyweights like Alipay and WeChat Pay in the world’s largest payment market, as it makes inroads into the ever-expanding Chinese financial system.

The purchase comes in the wake of a deliberate government policy to ensure a level playing field for all players and Beijing’s move to prevent monopoly in any sector of the economy.

PayPal had appointed Hannah Qiu as head of China business in August 2020, and she’s responsible for formulating a long-term strategy that would drive the company to have a firm foothold on the Chinese economy. Qiu is a former executive at insurer Ping An Group’s fintech unit OneConnect.

PayPal will focus on providing cross-border payment solutions to Chinese businesses, merchants, and consumers, leveraging on its global network to provide seamless services for its Chinese customers. PayPal has its job cut out, as this segment of the payment market also has some big names.

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PayPal has received the green light to acquire a majority stake in the local payments platform, GoPay. With this approval from the People’s Bank of China (PBOC), PayPal has become the first foreign payment platform to enter the Chinese market.

According to the statement from GoPay, PayPal will acquire a 70% controlling stake in the company through one of its subsidiaries called Yinbaobao based in Shanghai. With this move, PayPal will compete with the likes of local payment platforms such as Ant Financial’s Alipay and Tencent’s WeChat Pay, both of which are extremely popular in China. GoPay has licenses to carry out online as well as mobile transactions.

Although this approval from PBOC may come as off as surprising to many given the recent trade war, it is in line with the statement made by China’s central bank last year. The central bank said that it will open up China’s payments market to foreign companies to improve competition. In this regard, American Express was approved to set up card-clearing services in China late last year.

PayPal is yet to disclose the terms of the deal. But it said that the deal is expected to close by Q4 2019.

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