EBay Inc. (EBAY)’s PayPal unit aims to be the first foreign operator with a license to process electronic payments in China, allowing it to challenge local companies including Alibaba Group Holding Ltd.’s Alipay affiliate.
“We are cautiously optimistic we’ll be given a license,” after PayPal filed an application to the People’s Bank of China late last year, Senior Vice President for Asia Rupert Keeley said at a briefing in Hong Kong today. No overseas companies have so far been awarded a permit to process domestic payments in China, he said.
A license would allow PayPal to handle domestic payments in the world’s fastest-growing major economy, where it already helps businesses and consumers with cross-border transactions. China’s central bank awarded licenses last year to local operators including Alipay, owned by Alibaba’s billionaire Chairman Jack Ma, to let them process payments as the country’s e-commerce market grew to an estimated $121 billion.
PayPal may offer its new PayPal Here card-swiping device in mainland China once it receives the domestic payment license, Keeley said. He said he couldn’t predict when the permit will be obtained.
Alipay, formerly owned by Alibaba Group, had a 47 percent share of China’s Internet payment market in the fourth quarter, according to research company Analysys International. Second-ranked Tenpay, a unit of Tencent Holdings Ltd. (700), had a market share of 21 percent, according to the researcher.
Alibaba Group, part-owned by Yahoo! Inc. (YHOO), said last May it had to transfer Alipay to a company that’s majority owned by Ma to facilitate its application for a payment license from the central bank. In July, Yahoo agreed to a compensation deal that may result in Alibaba Group receiving as much as $6 billion from Alipay.
PayPal, the fastest-growing unit at EBay, the biggest U.S. online marketplace, said yesterday it started offering the PayPal Here device in the U.S., Canada, Australia and Hong Kong. The device, which works with Apple Inc.’s iPhone, can swipe credit cards and scan checks.
In the coming months, PayPal plans to open an office in India to expand its operations in Asia, in addition to a few other markets in the region, Keeley said, without giving a more specific time frame. At present, PayPal has offices in six Asian markets including China, Hong Kong, South Korea and Singapore.
To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.