American online money transfer firm PayPal recently secured approval from the People’s Bank of China to purchase a stake in local payments firm GoPay.
Paypal acquired 70% GoPay for an undisclosed sum and the transaction is expected to be closed in the next months.
This is consistent with China’s central bank’s earlier announcement in March 2018 that it would open its market to allow for foreign companies to operate payments systems in China.
While it is encouraging to see the Chinese government open up the market for a fair and open competition which will ultimately benefit consumers, it is unclear how PayPal intends to make a dent in a market where Alipay and Tencent collectively dominate 92.7% of the market.
The one thing is clear is that, if PayPal able to crack this puzzle they will be tapping into a mobile payments market that is expected to grow to US$ 96.73 trillion in 2023.
Paypal could very well pave the way to other ambitious fintech from the Western world seeking to have a piece of China’s enormous pie.
