Paypal has found a way to tap into the lucrative China market by partnering with search giant Baidu. The move will give Paypal access to an additional 100 million users currently registered on Baidu Wallet, while Chinese online shoppers will have access to PayPal’s 17 million international e-commerce sites.
Foreign merchants that accept PayPal will automatically accept Baidu Wallet as a result of the partnership. The deal is in response to China’s top payment firms, Alibaba Group Holding Ltd affiliate Ant Financial and Tencent Holdings Ltd and WeChat Pay, making aggressive moves to expand their payment networks overseas.
Both Alibaba and WeChat Pay recently announced partnerships with San Francisco-based startup Stripe, to expand the use of payment options outside of China. In May, Atlanta-based payments processor First Data said that it would allow more than 4 million US merchants to accept payments made by Alipay. In February, a Chinese-funded Silicon Valley payments startup, Citcon, announced a similar partnership with Alipay and WeChat Pay. Clearly, this agreement with PayPal Is Baidu’s response.
For Baidu, the partnership with Paypal allows it to compete with these competitors and begin to increase its market share. Alibaba’s Alipay represents about 500 million users, while WeChat Pay is approximately 600 million users. They both make up more than 90 percent of China’s mobile wallet market and have a combined spend of almost USD3 trillion.