Here Today, China Tomorrow: PayPal ‘Optimistic’ It Will Get A Domestic Payment License

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Hot on the heels of the launch of its new Here mobile payment dongle in the U.S., PayPal is joining the ranks of companies looking to get a piece of the action in what will, this year, become the world’s largest smartphone market: China.

The company says it is “cautiously optimistic” that it will become the first non-Chinese company to get a license to process domestic electronic payments — both online and via mobile devices. This would be in addition to a business it already has in the country to process international payments.

According to a report in Bloomberg, eBay-owned PayPal’s SVP for Asia, Rupert Keeley, today said that the company would look to offering its new Here card-swiping dongle in China if it gets the license. The dongle, which would move PayPal into mobile wallet services where its platform could be used at points of sale, was officially unveiled yesterday and currently works with iPhone and Android handsets.

That gives Here a potentially good opening in China: IDC yesterday noted that China is due to overtake the U.S. as the world’s largest smartphone market.

And while the iPhone is seeing “off the charts” demand in the country, according to Apple CEO Tim Cook, the market is currently being dominated by sales of Android devices (including those running on forked versions of the OS). These sell for lower price points than the iPhone — currently under $200 and soon moving to be less than $50 per handset, according to IDC.

But it’s not just about point-of-sale opportunities, which is still a new area for PayPal. Most of its business today comes from straight e-commerce on the Internet and via apps. But here, too, the future seems increasingly mobile as far as China is concerned: research from OnDevice out this week found that some 38 percent of consumers in China are already accessing the Internet only via mobile devices.

The e-commerce market in China in 2011 was estimated to be worth $121 billion annually, according to Barclays Capital. At the moment, it is dominated by two local players: the Alipay offering from e-commerce and Internet giant Alibaba has a 47 percent share of the market and rival Tencent’s Tenpay has 21 percent, says Analysys International.