US tech giant PayPal is the first foreign firm to fully own a Chinese payments firm after its acquisition of GoPay on Dec. 31.
Why it matters: The PayPal acquisition is a landmark in China’s financial liberalization amid an antitrust clampdown in fintech.
Details: PayPal acquired the remaining 30% of GoPay, according to the Chinese government’s company registration platform. The US company had bought 70% of the firm in September 2019, becoming the first foreign company licensed to offer payment services in China.
- Details of the deal were not disclosed.
- PayPal could not immediately be reached for comment.
Cross-border payments: PayPal said in 2019 that it wanted to tap into China’s market for cross-border payments. Unlike domestic transfers, the market for cross-border transactions is not yet dominated by giants like Ant Group and Tencent.
- Because China is the world’s largest exporter and importer, “the market for cross-border payments is immense,” Bill Deng, co-founder and CEO of XTransfer, a Chinese cross-border payment and risk management firm, told TechNode.
- Deng added, “There remain a large number of unresolved pain points in this industry,” which is still in its infancy, so there is room for new players.
Regulation: Regulators have followed up on Ant Group’s IPO suspension with further antitrust moves as they seek to rein in Big Tech’s power over the economy.
- Last week, the People’s Bank of China asked Ant to retreat to its original payments business and overhaul its operations in credit, investment, and insurance.
- Regulators have also ramped up efforts to bring in competition from overseas.
- They have “vowed to open up the sector to all foreign investors, to issue licenses necessary to operate locally,” Deng said. In 2020, ownership caps on financial services firms were scrapped.
- Several firms have already taken advantage of the new rules to set up wholly owned subsidiaries in China, including Allianz, BlackRock, Mastercard, and S&P Global Ratings.
- “The timetable for the liberalization of specific segments will become clear in the future,” the XTransfer CEO said.