PayPal, a wholly-owned subsidiary of U.S. eBay, announced that it has taken over China’s third-party payment platform Guopay, increasing its shareholding from 70% to 100%, making it the first fully foreign-owned third-party payment institution in China.
Rather than letting Chinese Internet giants such as Alipay, WeChat Pay and Jingdong Pay specialize in beauty, PayPal took over Guopay in “two steps” through its wholly-owned Chinese holding company, Meiyinbao.
PayPal, which has traveled to more than 200 markets worldwide but hit a wall in China, entered the Chinese payment service market only after the People’s Bank of China announced that it would accept applications for foreign-invested payment machines after China’s National “Two Sessions” declared in March 2018 that it would liberalize the access restrictions for foreign-invested payment institutions, until September 30, 2019, when the People’s Bank of China approved the application for a change in the shareholding of Guopay, and PayPal, through its subsidiary Mayinbao Information Technology (Shanghai), acquired 70% of Guopay, becoming the de facto controller of Guopay and taking over the payment license.
PayPal is also the first foreign payment machine to enter the Chinese domestic market. After another year and three months, PayPal took another step to get the last 30% of the equity, becoming the first foreign-owned third-party payment platform.
PayPal’s shell, Guopay, originally had a state-owned background and was once owned by HNA. The company has also been in the spotlight for its involvement in the HNA fraud case.
Tencent News reported that in 2018, Guopay was involved in a storm of illegal blood transfusion to a listed company. The report pointed out that Guopaybao allegedly violated the law by keeping customer provision funds in bank accounts, which were made into financial products with corresponding amounts to obtain bank loans, and allegedly channeled the loans to HNA Group. Also for violating the clearing management regulations and the relevant provisions of the management methods of non-financial machine and payment services, the People’s Bank found that StatePay objectively provided network payment services for illegal transactions and was imposed a huge fine totaling RMB 46.46 million.
And the Jiangsu Jinhu People’s Court announced in December 2019 that third-party payment platforms such as Guopay, which provided online fund payment interfaces for a number of websites, including the new Portuguese chess website, were fined for cases involving gambling.
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