Paypal, the leading global payment service owned by eBay (NASDAQ:EBAY), is looking to expand into China. It is trying to obtain a domestic payment license from the Chinese authorities, which would enable it to compete in the rapidly growing Chinese online payments space currently dominated by local players like AliPay from Alibaba and TenPay from Tencent. 
Chinese entry could boost Paypal’s payments volume
Paypal currently offers cross-border transactions for its Chinese users, but the domestic online payments market is closed for foreign operators. eBay aims to be the first operator to enter this space with a license. China’s e-commerce market was worth nearly $121 billion in 2011. If it succeeds in getting a license, Paypal could also bring its Paypal Here mobile card payments service to China, and become a major player in the Chinese online payments space.
Paypal processed a total transaction volume of nearly $119 billion in 2011. If it manages to enter the Chinese market, we could see a significant increase in its total payments volume, which would directly impact its net revenue from online payments. Paypal also plans to enter the domestic online payments market in India, which is a relatively smaller market than China.
Paypal is eBay’s second most valuable business, and accounts for nearly 27% of eBay’s $42 Trefis price estimate, which stands nearly 10% above its current market price.Notes:
- PayPal Aims to Challenge Alibaba With China Payments, Bloomberg [↩]