Ant Group, the fintech affiliate of Chinese tech giant Alibaba Group Holding, is betting on more partnerships and investments in Southeast Asia’s fast-growing digital payments sector to help it overcome a tougher regulatory environment at home.
“We’re very focused in [the region] because we believe it’s the time,” Jia Hang, Ant Group’s general manager for Southeast Asia, told Nikkei Asia in a recent interview, citing the reopening of regional economies as the COVID-19 pandemic wanes and international travel picks up.
On Wednesday, Ant announced a deal with Indonesian fintech company Akulaku that allows users of the latter to connect with Alipay+. The new partnership brings the total number of digital partners to the Alipay+ ecosystem to 13.
Alipay+ is crucial for growing Ant Group beyond its reliance on transaction fees. This is a must following Beijing’s increased oversight of China’s digital payments landscape, which has forced the company to revamp its business, including separating its microloan business from the rest of its financial offerings.
Hang’s comments underscore Ant Group’s confidence in its overseas foray even after the fintech giant was forced to abort what was expected to become the world’s largest public listing in November 2020. The IPO was ditched after Alibaba founder Jack Ma publicly criticized China’s financial system and its regulators as being outdated.
“We’d like to do more investing and partner with more businesses [in the region] to better serve locals,” he added.
A veteran with over 20 years of experience in the payment industry and former executive at the world’s largest credit card network UnionPay, Hang was appointed as Ant Group’s regional head in March—the first such position for Ant—after joining the group’s international business in 2015.
Since this year, Ant Group has been ramping up its overseas business through large investments. In April, the Chinese fintech took a majority stake in Singapore-based payment acquirer and processor 2C2P, a deal that Hang described as “a crucial piece” to expand its merchants base in the region.
Launched in China in 2004 by Alibaba Group, the QR-code payment app Alipay has grown into one of the world’s largest digital wallets with over 1 billion active users. Now operated by Ant Group, the superapp has been a favorite with Chinese overseas travelers.
The quest for more partners comes on the back of Southeast Asia’s booming digital economy. Total transaction value in digital payments in the region is projected to reach USD 195 billion in 2022 and almost double that by 2027, according to Statista.
Digital wallets have been mostly confined to their own domestic markets and typically cannot be used abroad. Ant Group is looking to connect the fragmented market with a single QR-code-based system called Alipay+, which can be used by different payment apps for online and in-store payments.
Launched in 2020, Ant Group is now leaning heavily on QR codes to connect its over 1-billion-strong user base in Asia to let consumers use their local digital wallet and currency to pay when traveling abroad.
Even as Ant Group’s transactions grow overseas, the company has chosen to partner with established local companies instead of launching its own foreign services and app from scratch.
Ant Group offers the companies investment and expertise, usually by taking a minority share and letting overseas partners take the lead as regards services and usage.
Partners include Indonesia’s Dana, Malaysia’s Touch ‘n Go, TrueMoney in Thailand, GCash in the Philippines and Singapore’s EZLink.
“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 slice of each overseas transaction, the expanded system will bring in recurring merchant subscription fees along with those for marketing tools, such as reward programs and services to help companies to develop their own apps—a strategy Alibaba followed when developing its own superapp.
In June, Ant Group soft-launched a digital bank called ANEXT in Singapore that allows 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],” he said.
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.