Under the agreement, Baidu's payment platform, Baidu Wallet, will be accepted by roughly 17 million PayPal merchants globally, the Chinese firm said in a statement.
The deal comes as China's top payment firms, Alibaba affiliate Ant Financial and Tencent, are making aggressive moves to expand their payment networks overseas.
This year Ant Financial entered a USD 1.2 billion bid for U.S. remittance firm MoneyGram, a deal that has attracted scrutiny from U.S. lawmakers who say it could threaten national security.
Ant has also purchased stakes in half a dozen payment firms across Asia as part of a plan to expand its finance business outside of China.
Tencent's WeChat Pay has also inked a series of partnerships with global payment firms and earlier this month said it has applied directly for a Malaysian payments license.
PayPal will work with Baidu's financial services group under the new agreement to target cross-border payments between Chinese consumers and online businesses based outside of China.
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