In the advent of making Indians go cashless, PayPal is strengthening its foothold in the Indian market at the right time. While PayPal was recently launched for domestic operations in India in November 2017, it has been available for Indian users since 2011, albeit with a per transaction limit.
On the other hand, PayPal was launched in China in the early 2000s with services specifically catered to the Chinese population, especially Chinese entrepreneurs. Having said that, PayPal China and India may not necessarily have the same success stories, according to current projections. Rather, not so swiftly, as it has experienced in other countries.
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India’s PayPal story
India presents an entirely different ecosystem, as about 85 percent of its financial transactions, even today, are conducted in cash. There has been a significant move toward digitization in India; however, the market of cashless financial transactions is still at its nascent stage. The most frequently used payment option for online shopping is “cash on delivery.”
Currently, PayPal India offers a single account for both domestic and international transactions. Prior to that, users were only allowed to use the account to receive international payments, and that too with a set transaction limit. However, domestic PayPal users can now use their account to shop online at selected domestic and international sites.
One of the biggest drawbacks of PayPal India is that the users cannot use their PayPal balance to make payments. The company does not have permission for its users to store money in their accounts. It also does not have the Prepaid Payment Instrument license from the Reserve Bank of India (RBI).
PayPal is not the only electronic payment service provider in India. There are several domestic hosts — such as Paytm, Momoe, PayUMoney, Mobikwik, and Citrus to name a few — who have already established their niche in the Indian market. As a result, PayPal’s extension to domestic transactions has come rather late, and it has to fight it out with local mobile wallets, along with the predominance of cash.
Finally, PayPal does not have a full reign to function in India as it does in other countries. The RBI refuses to grant banking licenses as it wants to restrict any possibility of money laundering and tax evasion. This crutch is proving detrimental to PayPal’s success in India, as it is preventing it from providing the full set of services that PayPal stands for in other countries.
China: Does PayPal really stand a chance?
2017 witnessed a PayPal-Baidu Inc. agreement that will have Baidu Wallet accepted by international PayPal users. This is significant, as it will grant Chinese firms more access to the international market and vice versa.
It’s also important as PayPal alone doesn’t stand much chance against the likes of Alipay and WeChat Pay in China. The latter are the top two popular payment options in China, and they have further consolidated their hold by expanding their platform abroad, specifically for the Chinese population to increase international transactions through their platforms.
The PayPal-Baidu Inc. partnership isn’t its first partnership with a Chinese eWallet. PayPal and China UnionPay have also agreed to work together, opening up the international market and the Chinese base to each other since 2010.
However, considering Alipay and WeChat Pay’s popularity locally, as well as their new partnerships with international platforms, PayPal is going to have a tough fight to stay relevant in China.
PayPal: A miss?
It’s a little too early to determine PayPal’s fate or popularity in India, as both India’s online payment sector and the new and improved PayPal India are in their early stages of growth. However, China has a veteran space when it comes to online payment services and PayPal may already be too late to the party.
Furthermore, considering the Chinese regime’s closed doors to Google and Facebook, and rather strict and unreliable policies toward international data sharing sites, people in China are less likely to rely on such international service providers. This may especially be true when they already have established services available locally.