PayPal will target cross-border payments in China

This fintech company is expanding into the world's largest payments market.

| More on:
PayPal building

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

In an interview with CNBC, PayPal (NASDAQ: PYPL) revealed plans to develop a digital wallet in China, the world's largest payments market. This comes after PayPal completed its acquisition of GoPay in December, making it the first and only foreign enterprise to operate a China-based payments company.

For the last several months, the fintech company has kept quiet about its plans in the country. But the China CEO for PayPal, Hannah Qiu, recently shed some light on the situation. Specifically, Qiu said the company won't compete against giants like Ant Group's Alipay and Tencent Holdings' WeChat Pay, which have a collective user base that exceeds 1 billion.

Instead, Qiu explained that PayPal is working in cooperation with local payment companies, though she didn't mention any names. She added, "What we need to do is to build a bridge, bringing good Chinese products overseas and taking good overseas products back to China." In other words, PayPal's new wallet will target cross-border payments.

This differs slightly from CEO Dan Schulman's commentary during the most recent earnings call. At the time, Schulman said PayPal would first grow its cross-border business, then "slowly but surely add incremental services into the domestic market." Either way, this could be a big opportunity for the fintech company. According to Statista, the business-to-business cross-border payments market in China should hit $875 billion in 2021.

That matters because PayPal primarily earns revenue as a percentage of the total payment volume (TPV). Last year, the company achieved record results, growing TPV 31% to $936 billion. That drove revenue to $21.5 billion. Even so, if this new product gains traction, PayPal could see a meaningful bump in TPV from its China business, and that could translate into meaningful top-line growth.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Trevor Jennewine owns shares of PayPal Holdings. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends PayPal Holdings and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended PayPal Holdings. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

A man looking at his laptop and thinking.
International Stock News

Why Alphabet stock was sliding today

Let's take a look.

Read more »

A man looking at his laptop and thinking.
International Stock News

Nvidia's stock was down despite its amazing earnings. Here's what history says is coming next

Although it might seem to defy logic, it's not an uncommon phenomenon.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Nvidia share price slips despite 94% revenue growth

Q3 earnings beat expectations, but what about guidance?

Read more »

high, climbing, record high
International Stock News

Could the S&P 500 Index hit 6,500 by the end of 2025?

Could the index climb higher?

Read more »

a small child holds his chin with his head on the side in a serious thinking pose against a background of graphic question marks and a yellow lightbulb.
International Stock News

Is it too late to buy Nvidia shares?

Is Nvidia stock a buy ahead of its third-quarter earnings report tomorrow?

Read more »

a group of people stand examining a large glowing cystral ball held in the hands of one of the group members while the others regard it with various expressions of wonder, curiousity and scepticism.
International Stock News

Here's what to expect from Nvidia on November 20

Can Nvidia score another win?

Read more »

Two people lazing in deck chairs on a beautiful sandy beach through their hands up in the air.
International Stock News

2 no-brainer Warren Buffett stocks to buy right now

While replicating Buffett's success isn't possible, there are a handful of his investments that are no-brainer buys.

Read more »

A man with a beard and wearing dark sunglasses and a beanie head covering raises a fist in happy celebration as he sits at is computer in a home environment.
International Stock News

3 reasons to buy Nvidia stock before November 20

This week marks a big moment for tech investors as perhaps the most anticipated earnings of the year will be…

Read more »