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PayPal parts company with major China partner

Payments giant on lookout for fresh blood

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Global payments behemoth PayPal could be in for a spot of bother in Asia after a much heralded partnership with Chinese e-commerce platform DHGate.com, its biggest in the region, ended this week.

The firm confirmed to The Reg that as of Monday DHGate does not accept PayPal as a payment method, although failed to elaborate on the reasons for the split – DHGate still accepts a wide variety of alternative payment methods including Visa, Mastercard, EPS, bank transfer and Western Union, for example.

A statement from PayPal had the following:

After a thorough annual business review by PayPal, both companies have mutually agreed to part ways due to different approaches to achieve their respective business goals and standards. PayPal and DHgate wish each other the best as both strive to deliver safer, more secure and trusted experiences for their customers.

The dissolution of what was claimed to be PayPal’s biggest partnership in Asia will come as something of a blow to the firm’s expansion plans here, especially if DHGate’s claims that it has attracted over three million buyers are correct, although there are reports that the e-commerce trader had hit something of a rocky patch recently.

PayPal is certainly not bereft of partners in Asia.

It recently teamed up with Japanese mobile operator Softbank to launch the $25m (£15.5m) joint venture PayPal Japan, and has rolled out its PayPal Here mobile payments system for bricks and mortar stores in the land of the rising sun, as well as Hong Kong.

However, it could be struggling for big name partners now in the huge Chinese market, where home-grown rival services like Alibaba’s Alipay, web giant Tencent’s Tenpay and China UnionPay dominate, among others.

That market, by the way, is set to be worth 18 trillion yuan (£1.4tr) by 2015 if the government’s plans to haul the country to the top of the e-commerce charts are realised.

PayPal’s parent company eBay does operate in the People’s Republic, but is dominated by domestic giant Taobao and focuses mainly on cross-border commerce deals.

Sadly, PayPal said it doesn’t comment on any of its merchant’s businesses, so there’s no way of telling exactly how well it's doing in China, but the firm was keen to emphasise it’s definitely still open for business in the region:

We remain committed to connecting Chinese merchants to our global buyer base, be it B2B or B2C cross-border transactions. As we are available in 190 markets and support 25 currencies, many Chinese merchants of all sizes accept PayPal on their web site to grow their overseas business.

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