The US financial firms have been aiming for the Chinese market for years, trying to secure a piece of this massive pie. The recent PayPal’s acquisition of GoPay is a great victory for this US-based payment provider, considering that they became the first foreign payment platform in China.
The Chinese financial market was untouched by foreign payment providers up until now. This gives PayPal an opportunity to leave a significant footprint and secure their spot in this rapidly growing financial market.
PayPal’s GoPay Acquisition Leads Them into a New Market
The recent statement by Guofubao confirmed that PayPal has acquired 70% of equity state in GoPay through the Yinbaobao Information Technology Co., Ltd. Thus, they became the first foreign platform that provides online payment services in China.
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 People’s Bank of China has approved this acquisition, opening a huge door for PayPal, which is now going to gain significant benefits from this lucrative market. GoPay provides both online and mobile transactions, primarily for e-commerce and aviation tourism industries.
What’s interesting is that this acquisition came at a very strange time, during the increased tensions between the United States and China. With the White House considering curbing some US investments in China, it was unexpected to see PayPal entering their market so confidently.
The Benefits of Entering the Chinese Financial Market
There is no doubt that entering the Chinese financial market is a massive expansion for PayPal. This move will open up plenty of great opportunities, especially considering how rapidly the market is growing.
China’s payments market is expected to grow over 96 trillion dollars by 2023. PayPal now has an opportunity to tap into this goldmine and secure their piece of the pie.
It is also important to mention the increasing demand for e-commerce, which plays an important role in the Chinese financial market. With most e-commerce suppliers being situated in China, the market is benefiting from the large number of transactions taking place every single day.
With the demand for e-commerce growing consistently, there is plenty of room for the Chinese payment market to grow. On top of that, the number of active mobile payment users is expected to increase massively and reach 956 million by 2023.