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Alipay First Data Deal Expands Chinese Payment Service in US

  • May 9, 2017
  • By Pete Nisbet
  • 0

A recent Alipay First Data deal has expanded the operation of the Chinese digital payment service, Alipay,  in the U.S.  Following a trial scheme in California, the firm has made a deal with First Data, the U.S. credit card processing service.  The expansion is primarily intended to meet the needs of Chinese tourists in North America.

 

Alipay is owned by Alibaba, and was launched in China by Alibaba’s founder Jack Ma in 2004. The First Data deal enables consumers to pay using Alipay at around 4 million businesses.  Alipay dominates the Chinese mobile payment market along with its main rival WeChat.  Both companies intend expanding their activities abroad, with the U.S. being a specific target market.

Alipay First Data Deal

Alipay First Data Deal Competes with ApplePay  and PayPal

Alipay is now competing with ApplePay, PayPal and Android Pay in the mobile payment market. The Alipay First Data deal may or may not be a reaction to Apple’s move into China.  Apple made a February deal with China Union Pay, the Chinese bank card association. This enables China Union Pay card holders to use ApplePay to make mobile payments in China.

 

Initially intended to be used with Jack Ma’s Alibaba, Alipay can be now be used by its 450 million customers to book hotel rooms and movie tickets.  It can also be used to hail cabs in addition to making money transfers and online payments. Its expansion could increase further if Ant Financial’s $800m purchase of U.S. money transfer service, MoneyGram,  goes through. Ant Financial operates Alipay, and the deal is backed by Jack Ma.

Euronet Counter-Offer for MoneyGram

Mid-March,  Kansas-based e-payment services company Euronet made a counter-offer of more than $1 billion. MoneyGram is waiting for Euronet to firm up the offer. Being a foreign company, Ant Financial needs regulatory approval from CFIUS (Committee on Foreign Investment in the US.)

 

The CFIUS recommendation then goes to the U.S. President who has the final word. The issue here is that Donald Trump is impressed with Jack Ma. Alipay might have the president on his side.

MoneyGram Game Changer for Alipay

Should Ant Financial/Alipay acquire MoneyGram, it would be a game changer for the Chinese company. MoneyGram has around 350 outlets in round 200 countries worldwide.

This would place Alipay way ahead of WeChat internationally. The issue is whether or not the CFIUS will approve the Chinese bid.  If it did, would President Trump side with Jack Ma or the CFIUS? The Alipay First Data deal is a major step in a significant expansion of the Chinese mobile payment system into North America.

About Pete Nisbet

Pete has been working in the field of website design and content for many years. He has a great interest in technology and current affairs, particularly business affairs. Pete's interests are technology, writing and world affairs and he is widely traveled. Pete also holds an Honors BSc from the University of Edinburgh.