PayPal Holdings Inc. (Nasdaq: PYPL) prepares to work side-by-side with Alipay and WeChat Pay in China, with a focus on cross-border payments, the company said at CNBC’s Boao Forum for Asia.
This week, the U.S. fintech giant revealed for the first time its China plans after the company acquired 100% of GoPay, also known as Guofubao Information Technology Co. Ltd., in January. The deal made PayPal the first overseas payment platform to enter the Chinese market, otherwise split up between Ant Group’s Alipay, Tencent’s WeChat Pay, state-owned UnionPay, as well as some smaller ones including YeePay, Ping An Pay, and Qiandai. Back in June 2019, AliPay counted 1.2 billion users worldwide.
However, PayPal said does not aim to compete with the local firms but to collaborate with them.
“In our overseas market, there are over 377 million individual users and over 20 million corporate users,” Hannah Qiu, the China CEO for PayPal, told CNBC. “What we need to do is to build a bridge, bringing good Chinese products overseas and taking good overseas products back to China.”
Qiu called its cooperation with unnamed local companies “very deep.”
So far, China is far ahead of other nations in the use of mobile payments. Research and Markets estimated in a May 2020 report that about 47% of mobile users in China used digital wallets. The research firm also noted the rise of mobile payment transactions amid the Covid-19 outbreak, estimating a 32% y-o-y growth in the transactions to reach 777.5 trillion yuan in 2020.
Another market analytics agency, Frost & Sullivan, estimated a 22% compound annual growth rate for mobile payments in China from 2017 to reach $96.73 trillion in 2023. While the report was released prior to the Covid-19 outbreak, in January 2019, Frost & Sullivan forecast “an increase in cross-border payment transactions, primarily due to growth in sectors such as eCommerce, travel and overseas education.” The firm also said it expects to see 956 million active users of mobile pay by 2023.
The parent of Alipay, Ant Group, has been dealing with regulatory troubles since November 2020 after its postponed IPO, which was expected to break world records. Since, it has lost about a third of its value as it is forced to restructure and divest some of its businesses as a result of an antitrust government crackdown.