For PayPal, eyeing growth and eyeing new markets, the gaze is, at least in part, turned eastward.
News came Thursday (Dec. 19) that the company has closed its deal to buy a majority equity stake in China’s GoPay (the formal, official name of the company is Guofubao Information Technology Co. Ltd.).
The deal had originally been announced at the end of September.
PayPal cements its status as the first foreign firm offering digital payments, directly, in the country.
The market is significant to say the least, as estimates peg online payments to account for several trillions of dollars. As reported by TechCrunch, mobile payments are growing at a compound annual growth rate of more than 21 percent.
PayPal follows another U.S. firm gaining entrance to the market. At the end of last year American Express gained permission to bring its card clearing services to China.
Terms of the acquisition were not disclosed.
“We’re pleased to complete this historic transaction, which enables us to broaden our participation in such a dynamic market,” Dan Schulman, president and chief executive of PayPal, said in a statement in tandem with the announcement of the deal, where PayPal bought 70 percent of the Chinese firm. “This important step will allow us to be a stronger partner to Chinese financial institutions and technology platforms.”
Schulman had said in a conference call with analysts to discuss third quarter results that the deal and the license to operate in China “enables us to expand upon our relationships with existing partners like China Union Pay and AliExpress and forge new partnerships with China’s financial institutions and technology platforms, allowing us to provide a comprehensive set of differentiated payment solutions to businesses and consumers in China and globally.”
The executive said the initial focus upon closing the acquisition would be on cross-border payment solutions provided to merchants and consumers.
Drilling down into the market opportunity, Schulman told analysts that, within eCommerce, there are roughly 500 million online shoppers in China “and they are going to drive something like $2 trillion in online sales this year, which is more than 50 percent of global online retail.” He said PayPal will be able to serve merchants who want to sell their offerings cross-border, but take payments back into China. PayPal will also serve multinational companies doing business in China.