Ant Financial is expanding rapidly outside of its home market, mainly to serve legions of big-spending Chinese tourists already familiar with its platform. A key question is whether the company, which is valued at more than Goldman Sachs and Morgan Stanley combined, will pursue Western consumers as well.
Ant Financial runs Alipay, which says the payment service and its affiliates have more than 1 billion (pdf) annual active users around the world. Alipay’s most recent deal outside of its home market is with Barclaycard, which processes almost half of Britain’s debit and credit card transactions. The agreement lets UK merchants accept Alipay smartphone transactions without having to replace their payment equipment. Ant Financial is an affiliate of the Alibaba e-commerce conglomerate.
On their own, Chinese tourists are an enormous market: they spent $258 billion in 2017, almost double that of second-ranked US holiday-goers. Alipay is available in 54 markets, and is a partner with the likes of India’s Paytm (Ant also has a stake in the fast growing payment service). Observers have long seen Alipay’s Chinese tourist strategy as a “spearhead” to one day go after non-Chinese customers.
Recently, Ant’s prospects for global expansion have become much more complicated. The US and China are locked in a trade war, and American officials have been warning allies about what they say are security risks of using equipment made by Chinese telecom group Huawei.
Ant has been under far less scrutiny than Huawei, which was founded by a former military engineer. Even so, the US blocked Ant’s acquisition of payment-transfer company MoneyGram in January 2018, citing national security concerns. Britain has been more open minded—earlier this year, Ant purchased UK payments group WorldFirst (paywall) in a deal reportedly worth around $700 million, making it the company’s biggest push yet into western markets. WorldFirst shuttered its US operations, apparently to avoid US interference in the deal.
Ant CEO Eric Jing says the company got its name because ants are small and its service was for the “little guys.” These days, though, the company is a behemoth. It raised almost as much money last year as all EU and US fintech firms combined, giving it a $150 billion valuation, the most in the world for a technology startup. While best known for Alipay, Ant also offers a credit rating system and a giant money market fund. After social-media apps, Alipay is the most-used app in the world.
Chinese regulators have taken note of Ant’s fast growth and potentially systemically important size. As scrutiny grows, the company has shifted its focus from offering its own financial products to running a technology platform for other financial companies. Its tech is plugged into more than 200 institutions, including banks, wealth managers, brokerages, and insurers.
Financial executives in New York and London have mixed opinions about Ant and Alipay. Some think the Chinese company’s QR-code smartphone wallets could one day compete with old fashioned payment cards in the west. Others think behaviors are slow to change and that contactless card payments are already entrenched.
A year ago, BlackRock co-founder Robert Kapito said he was “shocked” (paywall) by Ant’s valuation (higher than that of BlockRock, the world’s biggest asset manager), and worried its rise was a sign of tech disruption coming for incumbent financial companies. The trade war and tighter regulatory scrutiny have altered the playing field for Ant, but execs around the world are keeping a close watch on the Chinese company’s western ambitions.
The future of finance on Quartz
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This story has been updated in the second paragraph with Alipay’s most recent active user information.