PayPal has announced that it has become the first foreign payment platform to be licensed to provide online payment services in China. The firm managed to do this by acquiring 70% equity interest in Guofubao Information Technology Company (GoPay), which is a holder of a payment business license in the country.
Details of the financial terms were not disclosed, with the entire announcement, penned by Dan Schulman, President and CEO, coming to just four sentences. PayPal did reveal, however, that it expects the transaction to close in the fourth quarter and is subject to customary closing conditions.
Commenting on the news, Schulman wrote:
“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.”
According to Reuter’s coverage, China’s central bank announced last year that it would be allowing foreign electronic payment firms, like PayPal, into the country to promote competition in the domestic retail payment industry. It looks as though China is sticking to this so we will probably see other competitors enter the market soon too.