PayPal – the US-based and eBay owned payment service – is eyeing huge growth in China.
With a presence now in 190 areas worldwide, the company says it has a strong interest in cutting into emerging markets in Asia and beyond and, above all, China.
Ecommerce in China grew by 66 per cent (763 billion yuan or US$121 billion) last year according to Barclays Capital, but no overseas operator has so far been licensed to process electronic payments. Both overseas and domestic operators now face a different situation: of China possibly relaxing restrictions.
The recently established domestic operator Alipay (originally of the Alibaba Group) had a foothold of 47 per cent of the internet payment market in the last quarter of 2011, according to research company Analysys International. But domestic stakeholders in electronic payment services now see the need to adjust to the expected internationalisation of the market. So last month Alipay tied up with the China branch of Standard Chartered Bank – a global operator with 1700 branches in 70 countries.
The People’s Bank grants licenses to handle domestic and cross-border payment services. It is expected that China will meet the challenge of more and more payment services going online by listening to calls from the industry to relax regulations. PayPal’s senior VP for Asia Rupert Keeley said in statement in Hong Kong regarding its pending application: “We are cautiously optimistic we’ll be given a license.”
But Keeley could not say when the permit will be issued.
He said once it is obtained, PayPal might set up its PayPal Here swiping device service in China. A smartphone app and plug-in device will extend credit and debit card payment services to small business owners by electronically processing cards and checks. The PayPal Here service is now available in the US, Canada, Australia and Hong Kong. About one-half of the Hong Kong population owns smartphones. Initially, the service is limited to iPhone owners, but will be offered to other smartphone platforms later.
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