PayPal will become one of the first international companies to gain a payments license in China, after news emerged that the state-owned People’s Bank of China (PBOC) has greenlighted PayPal’s acquisition of a majority stake in local company GoPay.

PayPal, through one of its local China-based subsidiaries called Yinbaobao, will acquire a 70% stake in GoPay, according to a statement on GoPay’s website [in Chinese]. The deal is expected to close in Q4 2019.

GoPay, officially known as Guofubao Information Technology Co., was set up in 2011 as a joint venture between the China International Commerce Center (CIECC) and HNA Retailing Holding, a subsidiary of troubled Chinese conglomerate HNA Group.

Market

The Chinese online payments market is substantial, with total transaction values more than doubling to 2,126.3 trillion yuan (roughly USD$200 trillion) in 2018 compared to five years previous. Other big-name players operating in the space include Alibaba affiliate Ant Financial, formerly known as Alipay, which overtook PayPal as the world’s biggest online payments platform back in 2010. Earlier this year, Ant Financial announced plans to acquire U.K.-based cross-border payments company WorldFirst as it sought to boost its global payments aspirations, which came after the U.S. blocked a similar move by Ant Financial for MoneyGram.

Today’s announcement, while a milestone moment for PayPal, doesn’t come as a complete surprise. Last March, the PBOC revealed that it would open up the domestic market to foreign payments companies to improve competition, with American Express later given approval to launch in China last November. But it seems that PayPal’s “first” claim today relates specifically to online payments.

“We are honored to become the first foreign payment platform to be licensed to provide online payment services in China,” PayPal CEO Dan Schulman said in a statement. “We look forward to partnering with China’s financial institutions and technology platforms, providing a more comprehensive set of payment solutions to businesses and consumers, both in China and globally.”

It’s worth noting here that PayPal has previously partnered with Chinese payment companies looking to expand their own global reach — back in 2017, PayPal announced a tie-up with Baidu to target Chinese tourists abroad. As part of the deal, Baidu Wallet would be accepted by more than 15 million PayPal merchants globally.