BUSINESS Can Paypal make inroads in China's vast digital payments market?

BUSINESS

Can Paypal make inroads in China's vast digital payments market?

By Chen Tong | CGTN

10:32, January 20, 2021

File photo: CGTN

U.S. digital payments platform PayPal has taken all remaining shares in China's GoPay Information Technology. The move is an attempt to enter the vast payment market in the country.

PayPal bought a 70 percent stake in GoPay two years ago, but the whole takeover of the company has been kept very quiet. PayPal has said nothing about what kinds of businesses it hopes to do in China, but analysts say that the least likely is probably mobile payments, as Chinese consumers' shopping habits have already solidified, and it's unlikely they change.

"Alipay is providing an integrated financial solution and is the pioneer of online payment in China. WeChat Pay is equipped with the traffic advantage of the Chinese biggest social platform. They have dominated the digital payment market in China for years. Consumers have built a deep trust for them," said Blair Zhang, research analyst from Mintel China.

The latest report from the Payment and Clearing Association of China shows the most popular digital payment products in China are Wechat Pay, Alipay, and Union Pay, with more than 90 percent of consumers using digital payments choosing Wechat Pay or Alipay. Many are expecting PayPal to specialize in cross-border settlements, for outbound tourism or cross-border e-commerce payments.

"PayPal is influential in overseas markets and it has some business in China too. But every market varies. Whether the Chinese market and the Chinese merchants will use it or not depends on its user experience, efficiency and costs," said Lu Hongtao, assistant president of Allinpay Network Services.

Foreign players like Visa and Mastercard have already been involved in cross-border settlements in China for decades. Consulting firm iReseach predicts China's online cross-border payments value will see an annual increase of more than 11 percent by 2022.

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