PayPal Becomes China's First Third-Party Payment Platform With 100% Foreign Ownership

January 12, 2021 7:11 am

Beijing (PingWest)—US fintech company PayPal has become the first third-party payment platform with 100% foreign ownership in China following its purchase of additional shares of the domestic payment firm GoPay (国付宝).

PayPal Information Technology (Shanghai)'s equity stake in GoPay, an online payment platform jointly established by China International Electronic Commerce Center, a subsidiary of the Ministry of Commerce, and Cofortune Information Technology Co., Ltd, increased from 70% to 100%, media reports said Monday, citing data from company information website Tianyancha. Cofortune Information Technology Co gave up its 30% stake in GoPay.

With a state-owned background, Gopay has secured licenses for mobile, online and cross-border RMB payment services. The platform also introduces a social credit system to meet demands from enterprises and the development of e-commerce. It is also an essential part of the "Golden Customs Project," one of three major national technology initiatives, which aims to facilitate online import and export declarations via the computer network.

China has been implementing strict supervision in the financial sector for years. As early as 2011, PayPal applied for a third-party payment license from the People's Bank of China, but it failed.

Earlier in 2019, the central bank announced that it was opening the country's domestic market to let foreign companies operate mobile payment systems in China, a move intended to promote competition in the retail payments industry. Finally, persistence pays off. By by acquiring a 70% stake in GoPay, PayPal became the first non-Chinese payments company to be licensed to provide online payment services in China.

Since 2020, the Chinese government has stepped up reform and opening up in the financial sector, and many foreign-funded enterprises have benefited from this. BlackRock was approved to establish a wholly-owned mutual fund company, Allianz was green-lighted for first entirely foreign-owned insurance holding company, and JPMorgan was approved to take full control of local futures joint venture.

In 2018, the scale of China's third-party mobile payment transactions was 167.83 trillion yuan ($25.9 trillion), soaring by 59.7% year-on-year, according to reports. As expected, third-party mobile payments will enjoy higher market share than mobile banking by 2021 and occupy 58.1% by 2026, according to an industry report by Reportlinker.