PayPal Makes a Big Bet on China

PayPal’s launch of PayPal Complete Payments makes it the first foreign platform to enter China’s increasingly crowded online third-party payments market. Despite an economy already dominated by major payments processors, PayPal’s bet could yield significant rewards. 

PayPal has been active in China since 2004, having established several wholly-owned subsidiaries. PayPal Complete Payments is being introduced as an all-in-one payment platform, offering a suite of customized products and solutions to help merchants in China sell globally. It streamlines payment and receivables processes for domestic transactions and is designed to allow businesses of all sizes to compete in cross-border trade.

In the hopes of making the project successful, PayPal has teamed up with several Chinese e-commerce platforms, including Shoplazza, Shopyy, Ueeshop, BigCommerce, and WooCommerce. These partners, familiar with the needs and behavior patterns of Chinese merchants, are expected to simplify the user experience as they transition to PayPal Complete Payments.

“PayPal has facilitated the global expansion of many Chinese businesses,” said Hannah Qiu, Senior Vice President, China CEO, PayPal in a prepared statement. “We will continue to enhance and optimize the system and product capabilities of PayPal China, empowering Chinese merchants to expand business globally through more diversified cross-border payment solutions.”

Competition Is Fierce

China already has a well-established payments industry, with both Alibaba’s AliPay and Tencent’s WeChat Pay demonstrating strong levels of adoption. In March, Alipay reported a tenfold increase in usage by foreign tourists compared to the previous year, while the overall number of active users rose sixfold.

Despite the intense competition, the anticipated growth in China makes the prospects enticing.

“China can be tough, but in general that is where the growth and opportunity is,” said Don Apgar, Director of the Merchants Payment Practice at Javelin Strategy & Research. “For example, General Motors went big into China because only around 13% of the Chinese population currently owns cars. The market is not big, but the potential for growth is huge.

“It’s the same story with payments,” he said. “Right now, Alipay owns that market as a division of a huge Amazon competitor, Alibaba Marketplace. Overall, I would say this is a solid move by PayPal. It may not pay off immediately, but it is a strong long-term strategic play.”