Ant Group’s early vision for global expansion was centered on Southeast Asia. The company took strategic stakes in e-wallets in every major Southeast Asian economy. However, it was never clear how these disparate investments could be interlinked on a common payments rail.
Following restructuring mandated by China’s regulators that occurred concurrently with various geopolitical tensions that impacted its ability to expand in certain markets, Ant modified its global expansion strategy. The result was Alipay+, which aims to resolve interoperability hiccups for e-wallets throughout Asia. When a merchant installs Alipay+, merchant’s customers can then pay for goods and services with any of the participating wallets in the ecosystem rather than having to ensure interoperability with the wallets one by one.
In early January, Alipay+ announced a tie-up with Dubai Duty Free, the Middle East’s biggest travel retailer – which had annual sales of almost US$1.75 billion in 2022. This partnership will allow customers of Alipay and its e-wallet partners to pay for goods at Dubai Duty Free in their home currencies. In addition to Chinese customers using Alipay, these also include customers of the Philippines’ GCash, South Korea’s Kakao Pay, Naver Pay and Toss Pay, Singapore’s OCBC, Thailand’s TrueMoney, Mongolia’s Hipay and Italy’s Tinaba.
At the same time, Alipay+ is also pushing into the U.S. In December, the Chinese company announced it would partner with payment service provider Citcon to facilitate international e-wallet payments for American retail merchants. As part of the partnership, duty-free retail group International Shoppes will be among the first merchants gaining access to Alipay+ and its partner wallets. The partnership comes amid a recent wave of inbound travel from countries in the Asia-Pacific region.
A challenge for some merchants in the U.S. their tendency to use legacy payment infrastructure that may not be compatible with foreign e-wallets. This is the especially true for small merchants. For these reasons, Alipay+ and Citcon see a significant market opportunity.
Meanwhile, it appears that Alipay+ is looking beyond payments to fuel its international growth as seen by its recently announced tie-up with Europe’s Yapily, an open banking API infrastructure platform. Per the agreement, European bank customers will be able to make cross-border payments to Alipay+ merchants internationally directly from their bank accounts. Of the tie-up, Yapily CEO Stefano Vaccino said in a news release that “Alipay+ will act as a catalyst for mass adoption of open banking in Europe.”
That’s a bold prediction given that open banking faces some fundamental challenges. Use of open banking the European Union remains in the single digits despite the second Payment Services Directive entering into force in 2018. “So to say that hasn't reached its potential is rather an understatement,” Mairead McGuinness European Commissioner for Financial Stability, Financial Services and Capital Markets.
A persistent problem for open banking is banks’ ability to charge fees and control how much customer data they share with fintechs, while API quality is inconsistent. “The technical infrastructure for sharing data just isn't in place. And the data to be shared isn't standardized,” McGuinness said.
With that in mind, if Alipay+ is betting on open banking to drive its growth in Europe, it could be waiting a very long time before it sees results.