Will PayPal’s plans to open up a local wallet in China slump or is this the start of a more connected world?
China has long been the golden goose for Western businesses due to its thriving economy and massive market.
Although notoriously difficult for foreign companies to get a foothold, PayPal (NASDAQ: PYPL) thinks it can crack China.
What’s PayPal doing out east?
In January, PayPal became the first foreign firm to have 100% ownership of a payments platform in China. But until now, the U.S. fintech company has been quiet on its plans. On Monday, it unveiled plans to become the first Western company to set up a local wallet in China. The aim of this ‘wallet’ — a digital payment solution — is to open up seamless cross-border transactions between China and the rest of the world.
In the words of PayPal China CEO, Hannah Qiu:
“Our future business is mainly on cross-border transactions. Our value is more from overseas. In our overseas market, there are over 377 million individual users and over 20 million corporate users.”
Often considered an isolationist nation by foreign firms, PayPal could be sitting on a golden opportunity here. Rather than getting bogged down in domestic competition with dominant local players, Alipay and WeChat Pay, PayPal can do what it does best: connect the world. As cross-border trade between China and the rest of the world increases, most Western customers and businesses will be more comfortable using a company they know and trust.
It’s still very early days for these plans, but with global transaction value expected to show a CAGR of 12% between 2021-2025, resulting in a projected total amount of $10.5 trillion, this is a lucrative market.
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