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Ant Group expands in SEA

• Newman Jiang

Ant Group, owners of the world's biggest mobile payment platform Alipay, which has more than 1.3 billion users and 80 million merchants, processed more than $17 trillion worth of transactions in China in 2020. The company is now gambling on increasing partnerships and investing in Southeast Asia's rapidly-growing online payments sector to help offset a stricter regulatory environment in China.

"We're very focused in Southeast Asia because we think it's the right time," Jia Hang, Ant Group's GM for the SEA region, told reporters, pointing to the reopening of economies as the pandemic subsides and international travel increases.

This week, Ant announced a deal with Indonesian company Akulaku, a leading online banking and finance platform with a presence in Indonesia, the Philippines, and Malaysia. The agreement with Akulaku will enable users to connect with Alipay and increases the number of digital partners in the Alipay ecosystem to thirteen.

Alipay+ is critical for growing Ant Group beyond its dependence on transaction fees. Beijing's increasing oversight of the Chinese digital payment environment has forced Ant Group to overhaul its business, including unraveling its microloan businesses from the remainder of its financial services.

Jia Hang's remarks highlight Ant Group's confidence in its overseas expeditions even after the fintech giant was forced to abandon what was expected to become the world's biggest IPO in late 2020. The public offering was scrapped after Jack Ma, the founder of Alibaba, complained that China's financial system and its regulators were out-of-date.

"We'd like to invest and partner with more businesses in the region to better serve locals," Hang added.

General Manager of Operations and Chief Representative of America. He built China UnionPay USA in 2009 and was the first General Manager to develop the UnionPay business in America, from Canada to Argentina.

An old hand with over two decades of experience in the payment industry and former General Manager of Operations and Chief Representative of America at the world's most extensive credit card network, UnionPay. He built China UnionPay USA in 2009 and was the first to develop the UnionPay business in the entire Americas, from Canada to Argentina. Hang was appointed as Ant Group's South East Asia regional head earlier this year after joining the company's international business in 2015.

During 2022, Ant Group has been expanding its overseas business by making significant investments. In April, the Chinese fintech acquired a majority holding in Singapore-based payment processor 2C2P, a deal that Hang described as "a critical piece of the puzzle" to expand its base in SEA.

The QR-code payment app Alipay has grown into one of the world's largest digital wallets, with over one billion active users since it was founded in 2004. Now operated by Ant Group, the app remains popular with Chinese overseas visitors.

The search for more partners comes on the back of Southeast Asia's thriving digital economy. The region's total transaction value in digital payments is projected to reach $195 billion this year and increase by 100% over the next five years.

Digital wallets are typically limited to their local markets and generally cannot be used in different countries. However, Ant Group is looking to connect the market with its QR-code-based system called Alipay+, which other payment apps can use for online and in-store transactions.

Launched in 2020, Ant Group is leaning heavily on QR codes to connect its over one billion-plus user base in Asia and enable users to use their digital wallet and currency to pay when traveling overseas.

Even as Ant Group's transactions grow overseas, the company has partnered with established local companies instead of launching an overseas service or app of its own from scratch.

Ant Group offers the companies investment and expertise by taking a minority share and allowing overseas partners to take the lead with services and usage.

Partners include Dana in Indonesia, Malaysia's Touch' n Go, TrueMoney in Thailand, GCash in the Philippines, and EZLink in Singapore.

"We are working with them because we want to build up an open, collaborative digital payments and a digital marketing solution for this region," Hang said.

Apart from getting a piece of each overseas transaction, the growing system will bring in recurrent subscription fees along with those for marketing tools, such as reward programs and services to help companies develop their own apps, a policy Alibaba adopted when creating its own super-app.

Ant Group soft-launched a digital bank called ANEXT in Singapore in June this year, allowing foreign companies to set up accounts remotely as long as they are legally registered entities in the city-state.

"Overall, we are trying to build an end-to-end service to help small businesses and consumers to benefit from increasing digitalization," Hang concluded.