Ant Financial is super active globally, but what is beyond the headlines?

Written by Denis Suslov || November 02 2016

The recent wave of Alipay partnerships with merchant acquirers has spanned the globe. With the common goal of letting Chinese tourists pay with Alipay, one of their favorite payment methods, Ant Financial has partnered with Wirecard in Germany, Ingenico in France and First Data in the US.

By partnering with these international players, Alipay has gained access to a tremendous number of merchant relationships that these partners bring to the table. In China, Alipay owns merchant relationships, but expanding globally is challenging, even for the mighty (and well funded) Ant Financial. 

We wrote about the Ant Financial / Ingenico partnership before, but here's the information on the US deals: The cooperation with First Data, a merchant acquirer in the US, enables Alipay acceptance at several luxury and specialty stores in the country leveraging a First Data smart POS terminal called Clover.

Let's take a look at First Data's German peer Wirecard. The European company is also using a smart POS terminal to accept Alipay payments. But in addition to POS, the company has launched a Scan Alipay iOS app that merchants in its network can download on their Apple phones and tablets.

Globally, not all Alipay's merchants have rolled out smart POS terminals and have the traditional POS terminals instead or don't have POS terminals at all. As a result, such businesses can not accept Alipay via QR codes as all that's needed is another smartphone or a tablet that can read a QR code. So far this solution has been popular in Japan, South Korea, and Thailand.

The Wirecard and First Data partnerships seem to be very similar in how their partnerships with Alipay work. However, there's something that could make Ant Financial's work with Wirecard different - in June, Reuters reported rumors that Ant was discussing a 25% acquisition of the German company. Wirecard's stock was under short-selling pressure, and the company was looking for a large shareholder. Therefore Ant Financial may be the right investor for the German acquirer.

Analyzing these and other similar announcements, there are a few things worth noting:

  • Ant Financial prefers to partner with merchant acquirers globally, but can buy a non-controlling stake if the valuation is attractive, as in the case of Wirecard, or if there is a high growth potential, as in the case of Thailand's Ascend deal.
  • The robustness of Alipay's solutions is its strong suit: the company can offer either POS scanner or phone / tablet solution, so both major retailers and small merchants can accept Alipay payments.
  • With a large number of new announcements, it may seem that Alipay's global acceptance is already a foregone conclusion. However, at the moment Alipay is accepted only at the locations with the highest Chinese tourist traffic, such as the landmark shopping malls in popular tourist destinations. Compared to China UnionPay, Ant Financial still has some acceptance catching-up to do.