PayPal this morning announced it has completed its acquisition of a 70% equity stake in GoPay (Guofubao Information Technology Co. [GoPay], Ltd.), making PayPal the first foreign payment platform to provide online payment services in China. The transaction was approved by the People’s Bank of China on September 30 and has now closed.
Deal terms have not been disclosed.
GoPay has licenses for both online and mobile transactions, and mainly provides payment products for industries including e-commerce, cross-border commerce, tourism, and others. Similar to PayPal, GoPay allows merchants to accept payments on their websites when customers are shopping online. Though China’s payment market today is led by local players, including eWallet providers like AliPay and WeChat Pay, there’s room for PayPal to grow in a market where digital payments per year are counted in the trillions, not billions, of dollars.
On the mobile payments side alone, the market is expected to grow at a compound annual growth rate of 21.8%, from US $29.93 trillion in 2017 to $96.73 trillion in 2023, driven partly by increasing demand for e-commerce, according to a forecast from Frost & Sullivan. And the total number of active mobile payment customers is expected to reach 956 million by 2023, as well, the firm said. The market has also seen an increase in cross-border transactions, particularly in sectors like e-commerce, travel and overseas education. These reached $6.66 trillion in 2016.
U.S. financial services firms have for a long time struggled to enter China. Last year, China’s central bank said it would open up further to foreign payment companies, but approvals have been slow. In November 2018, American Express notably became the first U.S. card network to gain permission to set up card-clearing services in China. Visa and Mastercard have tried to enter, as well.
“We’re pleased to complete this historic transaction, which enables us to broaden our participation in such a dynamic market,” said Dan Schulman, PayPal president and CEO, in a statement about the GoPay deal’s closure. “This important step will allow us to be a stronger partner to Chinese financial institutions and technology platforms. We look forward to contributing to the growth of China’s e-commerce and payments ecosystem.”