When it comes to third-party payment, Chinese people think of Alipay and WeChat, but the strength of another international giant PayPal cannot be underestimated.
In December last year, PayPal was approved by the People’s Bank of China, and GoPay, which is 100% controlled by it, obtained a Chinese payment license, which also means that it has officially entered the Chinese payment market. What is PayPal’s next plan in China? Does it compete with Alipay and WeChat? What benefits will it bring to Chinese merchants and consumers?
At the Boao Forum for Asia Annual Conference 2021, Qiu Han, Senior Vice President of PayPal and CEO of China Region, said in an exclusive interview that PayPal has always attached great importance to the Chinese market and made unremitting efforts to apply for a license, hoping to be able to apply for a license in China. Conduct legal and compliant business development.
Cross-border payment involves multi-country supervision
With the vigorous development of the cross-border e-commerce market, cross-border payment has also become the focus of payment institutions, and many institutions have also poured into the cross-border payment market. “Speaking of the fierce competition in cross-border payment, I agree and disagree.” Qiu Han believes that there are many cross-border payment chains and end-to-end processes. Generally speaking, there is one input and one output. Up to now, the main business of PayPal is service. Chinese merchants sell their products, which is the process of exporting.
In Qiu Han’s view, PayPal’s advantages are concentrated in the “full chain”, especially at the collection end and at the level of individual user payments. PayPal has a very competitive advantage, with more than 377 million active users worldwide. Overseas, PayPal is the preferred payment method for many consumers, and this is also an irreplaceable advantage of PayPal in the short term.
It was reported that GoPay has a complete license. In addition to payment licenses, GoPay has also obtained fund payment business licenses, cross-border RMB payment business licenses, prepaid card issuance and acceptance business licenses. “The payment industry is a financial industry. It must first be licensed, and all businesses must be licensed. Distributing the income of Chinese merchants’ overseas business to merchants legally and compliantly is also one of PayPal’s competitive advantages in the future.” Qiu Han said.
She analyzed that to engage in cross-border payments, four basic conditions must be met. First, a legal entity must be established in China; second, a payment license must be obtained; third, cross-border payment qualifications must be obtained; fourth, cross-border payment must be obtained The product is subject to regulatory approval. Each of these four items needs to be met. “PayPal has become the first and the only foreign company that has a payment license and a wholly-owned subsidiary in China after it was approved by the People’s Bank of China to complete its wholly-owned acquisition of GoPay.”
In January this year, the People’s Bank of China announced the “Regulations on Non-Bank Payment Institutions (Draft for Comment)”. In terms of cross-border payment management regulations, it was mentioned that non-bank payment institutions that provide services for cross-border transactions shall comply with cross-border payment and cross-border transactions. Relevant regulations on overseas RMB business and foreign exchange management. Qiu Han believes that in the future, all organizations that promote cross-border business in the market will need to report to the Chinese regulatory authorities and apply for qualifications.
In fact, the cross-border payment chain is far more complicated than imagined. According to Qiu Han, cross-border payments involve two parties, and the two parties may involve multiple countries. Therefore, in the context of cross-border payment, how to meet the legal requirements, compliance requirements, and regulatory requirements of multiple parties is a complicated subject. Paypal has accumulated experience in operating in multiple countries around the world over the past 20 years and has advantages in this regard.
In contrast, PayPal’s competitor Payoneer avoids talking about compliance issues as it tries to enter the Chinese market.
Expansion in the Chinese market: local business will be launched in China
After PayPal enters China, what are the business adjustments? Qiu Han said that according to China’s regulatory requirements, a lot of work needs to be done. PayPal China team is intensively advancing related work.
“The implementation of our system in China, the implementation of all data in China, and the construction of the Chinese team have been active in progress. At the same time, the system is also being built and new products are being built.” She said that Paypal needs to be based on China’s national conditions and related regulatory requirements are used to adjust and restructure the product process, and at the same time apply to China for regulatory approval and filing.
It is understood that PayPal is also promoting its QR code. In May last year, Paypal officially revealed that it has launched QR code payments in 28 markets around the world, including the United States, the United Kingdom, France, and Canada.
Qiu Han revealed that PayPal also plans to launch QR code payment in China. “We hope to launch it to overseas users first, so that they will come to China to use some electronic payment scenarios.”
Speaking of the relationship with China’s third-party payment and financial institutions, Qiu Han said that PayPal and Ali, Tencent, and China’s local payment companies, banks and other financial institutions not only have no competition, but there are many complements. “Everyone has different advantages, and different advantages give us room for win-win cooperation.”
The new trend of China’s exports: from B2B to B2C
Last year, the new crown pneumonia pandemic raided, but China became the first country in the world to contain the pandemic. Due to the better control of the pandemic and the faster recovery of productivity, China’s export data is strong. On April 13, the General Administration of Customs of the People’s Republic of China released the import and export data for the first quarter, showing that the total value of China’s import and export of goods trade was 8.47 trillion yuan, an increase of 29.2% over the same period last year.
“During the pandemic in various countries, consumer demand will also undergo some changes. For example, anti-pandemic supplies and medical supplies, during the pandemic, it is not a problem of recovery, but an outbreak, and the demand has skyrocketed.” Qiu Han said.
She observed that in recent years, China’s export business has undergone great changes. “In the past, many of them were B2B and did not directly face end consumers. The added value of this model is relatively low, equivalent to wholesalers. Now more importers and exporters are starting to start. When you go to B2C, you can directly face overseas consumers. In fact, you can get a relatively high premium because many wholesale and circulation links are skipped.” She said that when it comes to collecting money from the C-side, PayPal can help merchants Consumers collect payments more efficiently.
At the same time, in foreign countries, during the pandemic, consumers in many countries have shifted their shopping from offline to online, and the trend is very obvious. This is a good thing for Chinese businesses, especially in areas where export manufacturers are more concentrated, like in the Yangtze River Delta and Pearl River Delta.
Qiu Han said that during the pandemic, PayPal has been helping merchants to better understand the changes in overseas consumer demand. “This change is very numerous and fast. Because the pace of pandemic prevention and control in each country is inconsistent, Paypal internally separates the needs of each country and feeds this information back to Chinese sellers in a timely manner, which also helps them to better sell. ”
She further pointed out that for PayPal, it is necessary to identify and control some merchants who fish in troubled waters, such as those that provide some counterfeit and shoddy products.
“We have just started in China, so we will continue to base ourselves on cross-border and give full play to PayPal’s global resource advantages. Continue to help merchants in China to better expand the overseas business and help them make funds more efficient, safer, and lower The cost recovery, this is our most core work.” Qiu Han said.
Source: Zhongxin Jingwei