New Deal may Launch Paypal in China

Ebay’s online payment processing wing, Paypal, is hoping to finalize an agreement that will see Paypal entering China’s e-commerce market by making it easier for Chinese merchants to make money from international sales.

Paypal announced yesterday that is has signed an agreement with the Chinese city of Chongqing in jointly developing an international e-commerce hub that seeks to build cross-border trade between Chinese merchants and buyers from across the world.

Paypal, with its access to 190 countries and regions has become an important tool for Chinese merchants wanting to enter trades with international consumers; however, merchants are still facing obstacles with online transactions.

One such problem faced by Chinese merchants is the fact that they are limited to converting under $50,000 per year when making sales to the US. Exchanging the foreign revenue into Chinese currency is another problem when merchants are forced to go to a bank and wait days, even weeks, before the funds are cleared in their accounts.

The agreement signed on Tuesday is aimed at overcoming these problems faced by merchants.

According to the agreement both parties will work together in setting up five international e-commerce centers that will focus on business development, merchant training and other areas.

We understand why Paypal will be throwing its whole weight behind the deal. This year alone, the Chinese e-commerce market recorded a total transaction volume at around $109 billion for the first three quarters alone.

For a long period of time the Chine government has worked to regulate the online payment service market, requiring companies to obtain official approval before they can operate as an online payment gateway.

Whether the Paypal agreement will be approved, will only be seen at a later stage.

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