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China's Alipay grabs slice of US market with First Data deal
[NEW YORK] China's mobile-payments king wants a piece of the world's biggest consumer market.
Alipay, owned by Jack Ma's Ant Financial, reached a deal that will let its users shop at 4 million US merchants served by payments processor First Data Corp, the companies said Monday in a joint statement. The rollout will begin with businesses that use First Data's Clover products.
"This will open up Alipay to where its truly ubiquitous across the United States and hopefully more countries later," said Souheil Badran, president of Alipay North America. In the US, "we decided rather than trying to do it on our own, this is an ecosystem that we're looking for a partner that can provide scale."
Alipay and Tencent Holdings Ltd's WeChat Pay dominate the mobile-payments market in China with a combined 90 per cent share. Alipay now wants to leverage the millions of Chinese customers who travel abroad by offering them services wherever they go. The firm's mobile wallet - which can hold cards from American Express Co, Visa Inc and Mastercard Inc, among others - is already accepted by more than 100,000 retailers in 70 international markets, the company said.
The First Data deal will put Alipay in the same league as Apple Pay in terms of acceptance. Apple Inc's mobile payments service can be used at 4.5 million locations in the US, CEO Tim Cook said last week on a call with analysts.
Still, Alipay, which started in 2004 as an online payments processor for Alibaba Group Holding Ltd's e-commerce sites, is entering a market that's much less reliant on mobile transactions than its home country. China's mobile payments transactions topped 38 trillion yuan (S$7.77 trillion) in 2016, triple the previous year, according to Beijing-based IResearch. That compares with US$112 billion in the US, Forrester Research said.
Alipay is just the latest Chinese payments player looking to make a deeper push abroad. Ant Financial has agreed to pay US$1.2 billion for the US money-transfer service MoneyGram International Inc. And China UnionPay Co is working with US payments networks to develop international standards for mobile payments.
First Data, which was taken public by private-equity giant KKR & Co in 2015, operates a debit-card network, processes card transactions and provides merchants with fraud detection and data analytics services. The company began a trial run with Alipay at select luxury stores in California and New York in November.
First Data shares have climbed 17 per cent this year, outpacing the 3.4 per cent advance of the 245-company Russell 1000 Financial Services Index. On Monday, the company reported better-than-expected first-quarter revenue of US$1.73 billion, fueled by a 7 per cent increase in transactions at its global business solutions unit.