Except WeChat and Alipay, do you often use other payment software? The answer is noncommittal. With a market share of more than 90 per cent, it is not easy for any outsider to “disrupt” China’s mobile payment market.
Yet it has come, and China’s first wholly foreign-owned payment agency has emerged.
China Pay has become the first wholly foreign-owned payment institution to acquire the wholly-owned shares of PayPal
The big event! After the US payment giant acquired 70% of China Pay, PayPal officially completed the purchase of the remaining 30% for an undisclosed amount.
Recently, the licensed payment institution Guofoubao Information Technology Co., Ltd. (hereinafter referred to as “Guofoubao”) underwent industrial and commercial changes. Chengxin Shareholders of Chengxin Information Technology (Shanghai) Co., Ltd., which is wholly owned by PayPal, hold 30% of the shares, while Fortis Information Technology Development Co., Ltd., a subsidiary of China International E-commerce Co., Ltd., “cleared out”.
Since Beijing ZhiRong Xinda Technology Co., Ltd., which holds 70% of the shares of GuoPay, is a wholly-owned subsidiary of BofA, that is to say, after the completion of the change, PayPal has a wholly-owned stake in the third-party payment company GuoPay. This means that this is also the birth of the first foreign-owned Chinese third-party payment company.
What kind of company is PayPal?
Mention Paypal, I believe that many people are still unfamiliar, because in China, when it comes to online payment, the first thing that comes to mind is Alipay, the second thing that comes to mind is WeChat payment
As the first payment software in the world, PayPal is the international trade tool with the largest number of users in the world. It was founded in 1998 and was once acquired by eBay in the United States as its wholly-owned subsidiary. In 2015, it was re-split and listed
PayPal is a NASDAQ listed company, founded in 1998 and headquartered in the United States. It covers more than 200 countries and regions around the world, has more than 286 million active payment accounts, and supports transactions in more than 100 currencies.
One of its founders is Elon Musk, the head of Tesla, a Silicon Valley star.
In 2000, Elon Musk resolved the competition for quick money transfers online by merging X.com with Confinity, founded by Peter Thiel and Max Lavkin. The new company changed its name to PayPal in February the following year.
In October 2002, eBay, the world’s largest auction site, acquired PayPal for 1.5 billion dollars, and PayPal became one of eBay’s main payment channels. Musk pocketed $160 million for the deal, making him a billionaire.
On April 10, 2015, PayPal was spun off from eBay and went public again. PayPal is now worth more than $280 billion.
Never give up seeking access to the Chinese market
For a long time, PayPal has cooperated with Chinese payment companies to carry out cross-border payment business in the Chinese market. However, due to the lack of domestic payment license, it has been restricted by various parties.
China Pay, founded in January 2011, used to be a payment agency under HNA Department. In 2011, it collected more than 40 million yuan in fines from the central bank. China Pay is the third batch of third-party payment companies to obtain payment licenses. Headquartered in Beijing, it is jointly initiated and established by CIECC, China International E-commerce Center, and HNA Group. It is a technology-finance comprehensive service platform based on third-party payment.
China Pay was granted a payment business license by the People’s Bank of China in August 2011, allowing it to conduct online payment and mobile phone payment services nationwide. In January 2015, we obtained the fund payment business license, and in May 2016, we obtained the cross-border RMB payment business license. In June 2017, in the process of renewal, the PBOC also increased the business of issuing and accepting prepaid cards (Hainan, Shaanxi, Yunnan, Hunan and Beijing) of Guofoubao.
On September 30, 2019, China Pay announced that the People’s Bank of China approved the application for equity change of China Pay, and PayPal acquired 70% of the equity of China Pay through its subsidiary, America Pay Information Technology (Shanghai) Co., Ltd., becoming the actual controller of China Pay and entering the Chinese payment service market. Media reports at the time said PayPal had been given shares held by HNA Group.
On December 19, 2019, PayPal announced that it had completed the acquisition of 70% of the equity of GoPay Information Technology Co., Ltd. (GoPay), subject to approval by the People’s Bank of China on September 30. After the completion of the deal, PayPal became the first foreign payment platform to be approved to provide online payment services in the Chinese market.
At the time, PayPal CEO Dan Schulman hinted on a conference call that the company might not go head-to-head with local payment giants in the Chinese market, instead focusing on cross-border payments and linking China’s payment ecosystem to PayPal’s vast international payment network. Not only does PayPal have a strong two-way network on its core e-commerce platform, it has made a number of corporate acquisitions around the world over the past few years. The company is now looking to offer Chinese consumers the ability to buy goods from overseas merchants through PayPal, and Chinese merchants the ability to sell goods to overseas consumers through PayPal.
In August 2020, PayPal announced the appointment of Qiu Han as the head of China business, serving as the senior vice president and CEO of China. This newly created position is fully responsible for the formulation of PayPal’s long-term development strategy in China. Prior to his appointment as the head of PayPal’s China business, Qiu Han worked for Ping An’s One Account, where he served as co-general manager and chief innovation officer.
This time PayPal officially completed the acquisition of 100% of the shares of China Pay, the next will see what kind of waves this international payment giant can set off in the Chinese payment field.
According to the analysis, there is no doubt that entering the Chinese financial market is a large-scale expansion of PayPal. This will create a lot of great opportunities, especially given the speed of market growth.
China’s payments market is expected to grow by more than $96 trillion by 2023. PayPal now has an opportunity to tap into this gold mine and secure their piece of the pie.
It is worth mentioning that e-commerce plays an important role in China’s financial market, and the demand for e-commerce is also growing. Most e-commerce providers are based in China and the market is benefiting from the large number of transactions that take place every day.