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Ant Financial Expands into South Korea and Philippines

Alibaba affiliate invests in Kakao Pay and Mynt

February 22, 2017 | Retail & Ecommerce

Alibaba affiliate Ant Financial is continuing its rapid international expansion, purchasing stakes in established digital payment services in South Korea and the Philippines.

Ant Financial, which operates China’s dominant digital payment service, Alipay, made a $200 million investment in Kakao Pay, the digital payment service offered by South Korea-based internet services giant Kakao Corp.

The deal comes on the heels of a separate move to acquire a stake in digital payment service Mynt, which is based in the Philippines.

Publicly traded Kakao is a major player in South Korea, where it offers a suite of services that includes messaging platform KakaoTalk and media-sharing service KakaoStory. The popularity of Kakao Pay, which is integrated with Kakao’s other services, is a good reason for Ant Financial to show interest in the company. According to a survey conducted by DMC Media in April 2016, 34.0% of mobile payment users in South Korea use a social media portal like Kakao Pay to complete digital transactions.

Types of Mobile Payment Services Used by Mobile Payment Users in South Korea, April 2016 (% of respondents)

Ant Financial’s move will create a more seamless digital shopping experience for consumers in South Korea looking to make purchases on Alibaba ecommerce platforms. Eventually, Kakao Pay will be a payment option for shoppers on Alibaba’s Tmall and Taobao marketplaces. Under the terms of the deal, Alipay will also be accepted as a payment method by some 34,000 vendors in South Korea.

Kakao is planning to spin off Kakao Pay as a subsidiary in April. The payment service allows users to link their accounts to their credit and debit cards, with transactions authorized through a user-entered passcode. Customers aren’t limited to just ecommerce purchases, either—they can also pay bills and submit remittances using the service. In South Korea, Kakao Pay faces competition from a number of other payment services, including electronics manufacturer Samsung’s Samsung Pay; search engine Naver’s Naver Pay; and Lotte L Pay from retail firm Lotte Group.

In its other recent move, Ant Financial snapped up a stake in the Philippines’ financial tech company Mynt, a subsidiary of Globe Telecom. Terms of the deal weren’t disclosed. Mynt, which has 3 million users, offers two services—a digital payments service called GCash, and a lending platform called Fuse Lending, which issues both personal and business loans. GCash can be used for a range of financial transactions, including ecommerce purchases.

Together, the investments mark two assertive moves into foreign markets where the internet is largely accessed through mobile devices. eMarketer estimates 72.2% of the population in South Korea will use smartphones this year. The device has a less impressive penetration rate in the Philippines, at 30.5%, but many new internet users in the emerging market will first go online via a smartphone. Ant Financial is positioning itself to appeal to the nascent market for mobile financial services in the country.

The company’s ambitions also extend to the US: It purchased payments service Moneygram in January for $880 million. It looks like Ant Financial’s moves into foreign markets show no signs of abating in 2017.

—Rahul Chadha

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