People’s Bank of China has approved the purchase of majority stake in local payment service provider Guofubao Information Technology (GoPay) by PayPal.

Bloomchain.ru reports that it makes PayPal the first foreign organization with a license to provide digital payment services in China.

Under the terms of the deal, PayPal buys 70% of GoPay shares. The deal will be fully closed in the 4th quarter of 2019, although the amount is undisclosed yet.

Once the deal is closed, PayPal will be able to exercise all kinds of activity that GoPay is licensed to do. The latter has operated in the Chinese market since 2011, and over the time the national regulator allowed it to process mobile and online payments in yuan within and outside of China, as well as to issue debit cards.

The purchase of GoPay will make PayPal the first foreign company allowed to work in China’s online payment market. U.S. giants Visa and Mastercard tried to enter into it before, but they have failed to get the permits from the Chinese regulator for over two years now.

“We are honored to become the first foreign payment platform to receive the license for providing online payment services in China. We look forward to partnership with Chinese financial institutes and technological platforms,” said PayPal CEO Dan Schulman.

According to Bloomchain.ru, American companies have long tried to enter into the Chinese market of financial services, but so far only American Express was successful. In 2018, the People’s Bank of China approved its application for a joint enterprise with Chinese partner, LianLian Group.

In the case of American Express, it is not about an online payment system: the company was allowed to create the system of internal calculations and clearing. American Express’ capacities in the Chinese market are also limited by the fact that the national payment system Union Pay processes all its transactions within the country.

PayPal is heading for tough competition with the largest national online payment systems in China - WeChat Pay, AliPay and Tencent. Nevertheless, the entry into one of the world’s biggest markets opens huge possibilities for the company: according to TechCrunch, the mobile payment market in China will grow by 21.8% or up to USD 96.73 trillion between 2017 and 2023. The total number of active users of online payment services will grow from 562 million to 956 million people in the same period.

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