Online Payments

Paypal and Other Digital Payment Methods in China

In contemporary life, more and more business and personal transactions are being conducted over the Internet than ever before. Large corporations and small businesses rely on electronic payments, or e-payments, to receive funds from clients and customers to pay employees and contractors for their services. Countries with large economies have quickly adopted electronic commerce payment systems as a fast, efficient, and secure means of transferring funds between parties.

China, of course, is no exception to this phenomenon. While the country may have had a late start in adopting digital payment methods compared to other advanced countries, it is quickly catching up. This blog provides an overview of the history and current trends of digital payments in China.


E-payments have been around since the 1990s when the Stanford Credit Union was established as the first financial institution to offer online banking. Later, in 1994, Pizza Hut started to accept orders in which the whole transaction was placed online. Soon after came PayPal, founded in 1999, as the first company to operate exclusively as an online e-commerce platform. This quickly became a popular alternative to traditional paper methods and card payments such as credit or debit.

Having established a strong foundation in the market as the first organization to offer a comprehensive e-payment method, PayPal rapidly ascended to the status of international business, becoming one of the largest worldwide platforms for online payments today.

Is Paypal Available in China?

Yes, in Jan 2021, PayPal finished its acquisition of a Chinese licensed payment company called GoPay. PayPal is the first foreign payment company with a domestic payment license and 100% ownership of China’s payment platform. 

PayPal sits at the top of the e-commerce industry, as the leading digital payment platform on the planet. With over 100 currencies represented in the company’s index, over 285 million payment accounts exist on PayPal’s servers in over 200 nations globally.

While many corporations throughout the globe were quick to embrace PayPal’s convenience and streamlined process, along with similar e-commerce payment services, China waited a comparatively long time to begin implementing digital payment methods for domestic commerce throughout the country.

In 2019, PayPal made its first official appearance in China when it acquired 70% of GoPay, a rudimentary Chinese platform designed to facilitate third-party payments within the country. The People’s Bank of China, a state-owned enterprise, affirmed PayPal’s bid shortly after that, so long as its Chinese subsidiary, MeiYinBao Information Technology, directly controlled these shares.

There is some speculation why it took so long for Paypal to integrate into China. The answer may lie in China’s complex financial regulations and its unique approach to online platforms. Regardless, PayPal and other e-payment methods have observed a rapid growth in China’s booming economy and continue to diversify day by day.

Digital Payment Methods in China

Today, China has emerged as a leader of the global wireless payment trend, with a mobile payment volume of 12.77 trillion USD. In 2015 alone, “a sum of over 1.4 trillion USD was transferred electronically in China. (Dennis NG, Evolution of digital payments: Early learnings from Singapore’s cashless payment drive. 2018.) In addition to PayPal, many other platforms have popped up as popular alternatives within the East-Asian nation, including AliPay from the world-famous Alibaba group, or WeChat Pay, a popular Chinese social subsidiary network WeChat which is owned by the multinational conglomerate, Tencent. Tencent also has a different e-commerce platform known as TenPay. However, this service shares many of its users with WeChat Pay, so the two are often grouped together in terms of the number of users and the total cash flow volume through their servers. In fact, with their growing popularity, AliPay and WeChat Pay have overcome the user volume of PayPal’s presence in the Chinese market. These two giants account for more than 90% of Chinese e-commerce payments daily.


The Alibaba group released AliPay to the Chinese public in 2004 as a simpler way to make payments on their platforms such as AliExpress. The emergence of platforms like PayPal in China, however, opened AliPay’s opportunities to e-commerce outside of their internal networks. Now, AliPay can be used to conveniently make several digital payments to different businesses in China, ranging from technology to groceries to leisure activities without having to use cash or checks.

With approval from Tencent, WeChat launched WeChat Pay in 2013 to provide its users with a streamlined means of paying for a wide array of goods and services through the online platform. Such a shift gave WeChat a  benefit as it gave the company invaluable insight into consumer behavior and its users’ buying patterns. Due to WeChat’s widespread popularity throughout China, upon its initial release, WeChat Pay observed tremendous success. It absorbed a significant portion of the e-commerce market almost immediately.

The Cultural Significance of Online Payment Methods in China


With e-commerce payment systems becoming increasingly popularized throughout China, using modern technology to make payments has seen steady and rapid growth as the primary means of consumer and corporate transactions. As a result, traditional transaction methods, such as payments with cash or checks, have seen a subsequent downfall. Many smaller businesses, such as wet market stalls, privately-owned grocery stores and retailers, fast food restaurants, and independently operated taxis still rely on cash payments to use their services.


Despite this, trends show that even these businesses are slowly inching their way towards adopting digital payments to simplify their consumer experience. These factors indicate that the Chinese business culture has a strong preference for e-commerce payment systems as a more convenient and simpler alternative to the traditional methods.


Now that WeChat and AliPay have grown successfully to the point of market dominance within Chinese borders, they are now looking for opportunities to grow outside of China. These platforms have recently expanded into Western markets to accommodate the high volume of Chinese tourism to this region. Rather than create an entirely new app to be operated within different countries like the United States of America, Canada, or the United Kingdom, WeChat and Alipay have turned their attention to contracting third-party merchants who can operate their platforms for them abroad, accept payments from their services, and make quick and easy currency exchanges for the sake of their clients. Due to this, many North American and Western European vendors have started to accept AliPay and WeChat Pay from Chinese tourists. However, the effects of these trends have yet to be seen.


Another reason that WeChat and AliPay have been trying to establish a presence in other countries is that it will offer a more streamlined system for Chinese citizens living abroad. They enable Chinese emigrants to send and receive money from their friends and families living in China. The e-payment methods offer a much easier means of transferring money than traditionally sending payments via overseas mail. Traditional payment channels, such as mailing paper money, can take weeks (if not months) and can be risky. For example, bank-sponsored wire transfers can take days to show up in the desired recipient’s account. Moreover, using these platforms eliminates the user’s need to seek a third party to process these transactions.

DCEP: The Growth of Digital Currency in China

The success of numerous digital currencies, or cryptocurrencies, throughout the globe has also made its way into China. As an incredibly developed market, the Chinese government is always seeking new ways to expand and diversify its economy. Noting the initial successes of digital currencies such as Bitcoin and Ethereum, Chinese officials have sought opportunities to introduce a similar system into China’s multiple commerce systems, which led to the creation of China’s Digital Currency Research Institute in 2014. The result has been China’s Digital Currency Electronic Payment, more commonly known as DCEP.

The program was initiated with a humble beginning in April of 2014, with a contained emergence into the Chinese economy. DCEP was initially only available in four Chinese cities: Shenzhen, Suzhou, Chengdu, and Xiong’an, the latter being a recent conception of Chinese President Xi Jinping as the nation’s first “smart” city.

DCEP operates as a form of digital Yuan (RMB), China’s national currency. It observes a one-to-one ratio with the RMB, so, unlike cryptocurrencies, there is no speculation as to its actual value. The People’s Bank of China maintains absolute control of DCEP and is in charge of administering it to smaller, localized banks throughout the country. This digital currency aims to maximize the RMB circulation with the expectation that it optimizes the currency’s availability and usage in other countries throughout the globe.


Additionally, DCEP’s creation was conducive to facilitating the RMB’s globalization and gaining more control over the then-present international payments system. The People’s Bank of China speculates that, should DCEP perform successfully, it may one day become popular enough to be used as a universal currency, much like the United States Dollar (USD) is used today.


DCEP is the only legally recognized form of digital currency in China. Services like Bitcoin are not permitted for legal monetary transactions in the country. Many believe that this is a regulatory tactic used to increase the popularity of DCEP within the country. Regardless, this initiative has observed success as the exclusive form of digital currency in China.


DCEP has played a significant role in reshaping financial operations in China. Part of the digital currency’s inception was that it could act as a substitute and eventual replacement of China’s money supply, which would likely mitigate Chinese money transfers’ cost and economic stress. Moreover, DCEP is projected to diminish the high cost of printing, maintaining, and recycling paper money and coins in China.

Many believe that DCEP will eliminate the risks of e-commerce in that illegal financing, money laundering, and counterfeiting will become far more difficult with a strictly regulated digital currency.


Such regulations are largely available because Chinese financial institutions will have the ability to oversee digital currency transactions at a higher capacity. It is speculated that this is why the Chinese government waited so long to engage external e-payment platforms such as PayPal. They wanted to ensure that they had a system in place to reduce illegal monetary practices.

The Supply and Distribution of DCEP will be Based on a Two-Tiered System:

The first deals with transactions operated between the People’s Bank of China and financial institutions, such as banks and non-financial institutions (Tencent and Alibaba, to name a few.) On this first tier, The People’s Bank of China would issue units of DCEP to these intermediaries.

The second tier deals with the intermediaries listed above and also their clients. On this tier, the clients, who are participants in the retail market and individual vendors, would send and receive DCEP as a supplement for traditional paper money so that the entire process could be operated digitally.

Chinese engineers have already completed the backend infrastructure for the DCEP network. This includes processes like testing and debugging the software that the digital currency exists on. Additionally, the parameters, such as regulations, constraints, and purposes of DCEP, have been established by Chinese regulatory bodies.

A wide variety of companies and industries have already announced their willingness to accept and participate in the market of DCEP. These include businesses like restaurants, post offices, supermarkets, and hotels. Specific companies that have signed on for the testing of DCEP include McDonald’s, Starbucks, and other international corporations with a strong record of participation with the Chinese government.



While China may have taken its time to engage e-commerce payment systems compared to other advanced national economies, it is clear to see that their engagement in these platforms, however late, has been marked by notable success. Paypal in China and the emergence of these services into the Chinese market has provided a simple and effective way for Chinese consumers to pay for a wide variety of goods and services. More than ever before, e-payments are a popular and convenient means of making transactions in the Chinese market. While certain digital payment methods are still being watched closely for their long-term viability, it seems that China’s digital payment methods are here to stay.

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1 year ago

thanks for such detailed information

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11 months ago

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5 months ago

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