Accessing the domestic Chinese payments market is the holy grail for a foreign payment services provider and PayPal has been trying for the past four years.
According to a published report by the Chinese online website The Paper, PayPal has not given up and has been actively communicating with regulators to secure a license in China.
Securing a payment license is still a rather complicated process for foreign-funded companies said Lu Liuliu, General Manager of the Merchant Business Unit of PayPal China.
However, “PayPal headquarter and PayPal China is taking this task very seriously. We are very determined,” he added.
Without a business license, PayPal is unable to conduct local transactions in China and until it can gain approval has instead focused on providing services for cross-border eCommerce between China and other countries it serves.
Even with this current restriction, with over 21 percent of PayPal’s transactions involving cross-border trade, the Chinese market is very important for PayPal’s global success.
Race To Be First
PayPal may be the largest, but it is not the only foreign payments provider wanting to enter the Chinese domestic payments market.
In June, London-based payment services provider WorldFirst applied for a license to operate in China’s domestic market. And similar to PayPal, the status of their application is still pending approval from China’s regulators.
With an increasingly growing middle class in China, the large potential of the domestic consumer market could become a significant boost for a foreign payment services provider.
READ MORE: China’s exploding eCommerce market is real
Currently, Chinese companies such as AliPay and Wechat Pay dominate domestic eCommerce and retail payments as Chinese regulations provide a lot of protection from foreign firms.
However, with both Chinese companies already working outside of China to attract more non-China business, there is political pressure, especially from the Trump administration, for China to open up its domestic market to foreign businesses.
What do you think about PayPal trying to expand into China? Do you think it could help your business if more Chinese customers would adopt PayPal as an alternative payment method?
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