PayPal Inspired By Chinese Payment Apps


Jan. 26 2021, Updated 11:12 p.m. ET

Facilitating payments isn’t enough

At the Credit Suisse 21st Annual Technology, Media & Telecom Conference, PayPal (PYPL) chief financial officer John Rainey stated that the company aims to become an everyday part of customers’ financial lives. To insert itself into customers’ routines, PayPal acknowledges that it cannot limit itself to its roots of facilitating payments for merchants and consumers. In recent years, competition has increased in PayPal’s core payment market, with Apple and Square gunning for market share.

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Acorns deal fits into strategy

PayPal’s strategy to become part of customers’ routine was inspired by Chinese (MCHI) payment apps such as Tencent’s (TCEHY) WeChat Pay and Alibaba’s (BABA) Alipay. Without specifically naming these two popular Chinese mobile payment services, Rainey stated that “if you look at some of the companies that have done that, in China, for example, they do have complementary services to their payment offerings, whether it be providing consumer credit or investment options. And that is absolutely what we’ve done with our acquisition strategies.” Rainey cited PayPal’s investment and integration with Acorns as part of its strategy.

WeChat and Alipay driving payment digitization in China

Secular online shopping trends are encouraging the uptake of digital payment services such as WeChat and Alipay, which are fueling the growth of China’s mobile payment market. According to data from iResearch and Forrester Research cited by The Financial Times, China’s mobile payment volume hit $5.5 trillion in 2016, indicating that China’s mobile payment market was more than 50 times larger than the US (SPY) mobile payment market that year.


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