In a bid to expand online payment business in the US after a successful run in India with Paytm, Chinese e-commerce giant Alibaba’s digital payments arm Ant Financial has bought global money-transfer service MoneyGram for nearly $880 million.
The transaction by Ant Financial which runs Alipay, China’s largest payments service through a mobile wallet app similar to what Paytm offers in India, will connect MoneyGram’s network of 2.4 billion bank and mobile accounts and 350,000 physical locations with its 630 million users (450 million with Alipay and 180 million with Paytm).
“The acquisition of MoneyGram is a significant milestone in our mission to bring inclusive financial services to users around the world,” said Chief Executive Officer of Ant Financial, Eric Jing, in a statement.
The move will provide consumers in over 200 countries and territories with convenient and accessible financial services, which furthers Ant Financial’s mission to promote equal access to financial services globally.
“The combination of Ant Financial and MoneyGram will provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the United States, China, India, Mexico and the Philippines,” Jing added.
MoneyGram is a popular financial service among Indians for transferring money to a bank account, mobile wallet or receive in cash from abroad.
The transaction will help expand Ant Financial’s business in new global markets following its recent partnerships with Paytm in India and Ascend Money in Thailand. In India, Alibaba Group and Ant Financial are the largest shareholders of One97 Communications, the parent company of Paytm.
“One of MoneyGram’s greatest strengths is its high-quality team of employees. We are committed to continuing to invest in MoneyGram’s workforce and growing jobs in the United States,” Jing said.
The takeover by the Chinese group will need regulatory approval from the US Committee on Foreign Investment.
The acquisition could help the company extend the lead as well as expand overseas, as competition is growing in China with rival Tencent’s WeChat payment system.
Ant Financial’s shopping spree in the US comes against a backdrop of rising tensions between China and the world’s biggest economy.
US President Donald Trump, before taking office, questioned whether the US should continue its “One China” policy, sparking fury in Beijing, BBC reported.
During his presidential campaign, Trump threatened to impose punitive tariffs on Chinese imports.
The Founder and Chairman of Alibaba, Jack Ma, held a meeting with Trump in December last year. While Trump has been critical of China, the President said he had a “great meeting” with Ma, who chose to float Alibaba on the New York Stock Exchange.
If the MoneyGram deal goes through, it will be Alibaba’s second acquisition in the US. Last year the e-commerce giant purchased EyeVerify in a $70 million deal.
EyeVerify is a start-up based in Missouri, which uses biometric authentication technology for securing user’s online data and transactions.
With the latest acquisition Ma is creating a global fintech business across China (Alipay), the US (Moneygram), and India (Paytm).