As a payment platform under eBay, PayPal can rely on its parent company eBay, an Internet trading platform that brings together merchants from all over the world, to continuously expand its cross-border payment business and enhance its competitiveness in the cross-border third-party payment market: Currently, PayPal has more than 200 million registered users in more than 190 countries and regions around the world, has cooperative relationships with 15,000 banks, supports payments in 24 currencies, and its transaction volume in 2010 exceeded US$71 billion; at the same time, in cross-border trade, more than 90% of sellers and more than 85% of buyers accept and use the PayPal platform.
In order to open up the Chinese market, PayPal started cooperation with China UnionPay in cross-border payment business in March 2010, providing high-quality payment and settlement services for Chinese consumers’ cross-border e-commerce transactions: users only need to link their UnionPay cards with their PayPal accounts to shop and pay on overseas websites that have signed contracts with PayPal.
Specifically, PayPal’s payment process is as follows:
(1) Account registration
Use an email address as the account name, and fill in relevant information such as the credit card number on the registration page. After passing the verification, you will become a PayPal user. Transfer a certain amount of money from the linked credit card to your PayPal account to increase the account balance.
(2) Payment of goods
The user first logs in to the PayPal account, fills in the recipient’s email address, remittance amount and currency on the payment page, and then chooses to pay the remittance.
(3) Receipt notification
PayPal sends an email to the merchant or recipient to notify them of the pending payment.
(4) Receiving payment
Merchant payment includes two situations: if the merchant receiving payment is also a PayPal user, the payment can be directly transferred to its account; if the merchant is not a PayPal user, it first needs to follow the instructions in the email to enter the PayPal website, register as a PayPal user, and then choose to deposit the payer’s money into a PayPal account, credit card or other bank account.
It can be seen that as a third-party payment platform, PayPal ostensibly uses email to complete payments, but in fact it provides online buyers and sellers with a virtual account and a system platform for transfer and bookkeeping. The actual flow of funds occurs between the banks where the two parties to the transaction open accounts and PayPal’s own bank accounts. Emails, which seem to be necessary, actually play a role in information transmission and communication during the payment process.
As long as both parties to an online transaction are PayPal users, the platform can be used to realize the flow of funds, and there is no necessary requirement for the consistency of the two parties in terms of the bank where they open accounts, the country where they are located, and the currency used. This obviously greatly simplifies the cumbersome procedures of cross-border payments and optimizes the user’s cross-border online payment experience.