Keeping an Eye on Alibaba, Ant Financial and Alipay

by Sarah Grotta 0

Alibaba

An article in MarketWatch regarding Chinese e-commerce giant Alibaba and Ant Financial is unsurprisingly about their financial footing, their corporate structure, and financing arrangements.  Entwined in that information is a story about the importance that payments makes.  Alibaba is in the process of gaining 33% control of Ant Financial, which owns and manages Alipay, one of the largest payment apps in the world. That payments capability is the starting block for Ant Financial to offer a seemingly endless array of other finance-related services including lending and wealth management:

Ant benefits when Alibaba succeeds in its retail initiatives, of course, because consumers use the Alipay product to pay for items. But Ant’s services go beyond traditional payment processing and include things like wealth management, which give Ant a more diversified revenue stream that’s not as tied to Alibaba’s performance.

“Currently, Ant’s payment services cover 13 different consumption scenarios, including online shopping, retail stores, gaming, daily household, dining, money transfer, public welfare, credit, financial services, mobile top-up, campus, transportation, and medical services,” wrote Barclays analyst Gregory Zhao, who rates Alibaba’s stock at overweight with a $220 target price. 

Part of the interest in Alipay is its recent arrival in the U.S. and other Western markets.  In the U.S., their activities have been focused on the acquiring business, partnering with acquirers and merchants to accept Alipay payments.  Later this month, Mercator Advisory Group will publish a report regarding the Alipay phenomena and discuss competitor WeChat Pay and partner Paytm

Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group