PayPal, an internet payment system owned by online auction site eBay (EBAY.NASDAQ), announced that it will partner with state-owned China UnionPay, China’s largest electronic payment service provider, to allow Chinese consumers with UnionPay debit cards to shop from overseas merchants, the Wall Street Journal reported. The move will position PayPal to compete directly with the Alibaba Group’s online shopping and payment services, including Taobao.com, and indirectly with rival Yahoo (YHOO.NASDAQ), which owns a 39% stake in Alibaba. By linking their UnionPay cards to PayPal accounts, Chinese shoppers will be able to access nearly eight million online merchants world-wide. Until now, only Chinese users with international credit cards like Visa or Mastercard could use PayPal services, but almost every Chinese citizen with an electronic debit card linked to a conventional bank account uses UnionPay. The partnership will also help users bypass foreign-exchange regulations by providing an online platform for China UnionPay, which PayPal said has already been approved to conduct such transactions by "the relevant regulatory bodies in China."
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