U.S.-funded PayPal has wholly taken over the mainland third-party payment platform “Guopay”, which will become the first fully foreign-owned third-party payment institution on the mainland. According to the analysis of former Bank of Communications (Hong Kong) chief economist Luo Jiacong, this move may indicate that the Chinese Communist Party is using this U.S.-funded payment platform with a market capitalization of US$280 billion to achieve the purpose of “lending strength to fight strength”, in order to make domestic third-party payment platforms, especially Ant Group’s Alipay, obey, and to create the illusion of opening up the domestic financial market.
At a time when Ant Group is being suppressed by domestic regulators, U.S.-owned PayPal has increased its stake in Alipay from 70% to 100%, making it the first fully foreign-owned third-party payment platform in China.
Guopay has a variety of payment products, including B2B and B2C online payment products and mobile payment products, cloud account services for enterprise fund management services, cross-border payment solutions for cross-border commerce, and mobile wallet clients for individual users.
PayPal was established in 2011 as a joint venture between the China International Electronic Commerce Center of the Ministry of Commerce and HNA. In 2018, PayPal had, involved in the illegal deposit of customer provisions in bank accounts, which were made into financial products of corresponding amounts by banks to obtain bank loans, and allegedly channeled the loans to HNA Group, after which HNA began to fade out.
PayPal applied to enter the market in March 2018 after the mainland opened up access restrictions on foreign-invested payment institutions, and on September 30, 2019, the People’s Bank of China approved the application for a change in the shareholding of Guopay, with PayPal buying 70% of the shares, and the “HNA Major” Tong Fu stepping down as chairman in January last year and being taken over by PayPal executives, which was seen as a transfer of power.
Currently, Alipay has been granted several licenses to operate Internet payment, cell phone payment business, fund payment business, cross-border RMB payment business and additional prepaid card issuance and acceptance business.
Ant Group’s Alipay has been repeatedly targeted by China’s regulatory authorities, but at this moment it is attracting foreign investment in PayPal to enter the third-party payment market, what are its plans? According to Apple Daily, economist Luo Jiacong pointed out in his analysis that “the fight against Jack Ma is an internal struggle to prevent him from plotting to usurp the throne and get richer than the country”. “Speaking of opportunities everywhere, hoping to attract the inflow of capital, I wonder if PayPal has fallen for the scheme, why will (think China) allow the market economy?”
He continued to analyze that the opening of the market to PayPal may be a way to “lend a hand” to make domestic third-party payment platforms listen, and that “common sense tells us that the Chinese Communist Party will not really open up the financial market”.
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