The partnership "will give UnionPay customers more choice when shopping cross border and has the ability to contribute to the overall growth of China's e-commerce ecosystem," said Jim Magats, PayPal's senior vice president of global payments, in a statement.
"It will also give PayPal the opportunity to explore the option to expand PayPal's digital wallet to physical retail locations where UnionPay is accepted in China, or internationally," he said.
PayPal and UnionPay said they were working to better serve joint customers and merchants to grow digital payments in China and globally. This includes giving PayPal customers the opportunity to use its system at the merchants where UnionPay is accepted.
UnionPay cards can now be added to PayPal wallets in Australia, Philippines, Singapore, South Korea and Thailand, the companies said.
During 2020, PayPal and UnionPay said, they intended to add more than 30 markets, enabling UnionPay card holders to shop at about 24 million merchants where PayPal is accepted through the PayPal wallet.
Morgan Stanley analyst James Faucette raised his target on PayPal to $137 from $129 while affirming his overweight rating.
"With about 130 million UnionPay cards issued outside mainland China, UnionPay cards are becoming an important payment option of more and more global customers," said Larry Wang, vice president at UnionPay International.
UnionPay International is a subsidiary of state-backed China UnionPay, an association for China's banking card industry, operating under the authority of the People's Bank of China.
It is the only interbank network in China that links all the ATMs of all banks throughout the country.