EBay Inc.'s PayPal Inc. says it has partnered with China UnionPay Co., China's biggest card issuer, enabling Chinese consumers to shop online with international retailers using their China UnionPay bank cards.

Jeremy Seow, a PayPal spokesperson, tells PaymentsSource that the service could be available as early as this summer, although a specific schedule for the service has not been decided.

"The Chinese consumers will be offered PayPal accounts to make it easier to shop online from both domestic and international merchants through PayPal's network," he says, adding the service is free to consumers.

Shanghai-based CUP has issued over 2.1 billion cards worldwide so far, according to the card company.

PayPal has operated in China since 2003 as an eBay subsidiary.

At a conference held in Macao in January, Alan Tien, PayPal China general manager, said China has become PayPal's largest Asian market.

Wang Kaiyu, an analyst at Beijing-based consulting firm CCID Consulting, says the new service is likely to appeal to China's growing middle class.

"They have more disposable income and they like to spend money on luxuries and foreign brands” he says. “Also, purchasing directly from merchants abroad is less expensive than in China,” Kaiyu says.

But Wang notes that PayPal is unlikely to see immediate results from the bank partnership, as China's emerging middle class is "still a very small group" within the nation's 1.3 billion population.

Wang suggests that the partnership will not pose an immediate challenge for the dominant Chinese auction-site operator, Alibaba Group, which helped to edge eBay out of China in 2006.
Alipay has 300 million registered users so far, and enjoys a 49.8% market share in China, according to Shanghai-based research firm iResearch Consulting Group.

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