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Here’s How Ant Group is Charting its Path to ASEAN Domination

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Ant Group, the fintech affiliate of Chinese e-commerce giant Alibaba, is pursuing its expansion plans across Southeast Asia, ramping up its business in a region that’s characterized by a fragmented payment market and no clear leader.

In Southeast Asia, the group has been working on expanding the foothold of Alipay+, a suite of cross-border digital payment and marketing solutions for businesses it launched in 2020.

The goal here is for Alipay+ to become the dominant digital payments ecosystem, connecting the region’s digital payment market with a single QR code-based system that’s supported by different payment apps to allow for both online and in-store payments.

Jia Hang

“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. “We’d like to do more investing and partner with more businesses to better serve locals.”

To this end, the firm has been actively pursuing partnership and investment opportunities, inking a number of deals over the past year.

In April, it took a majority stake in Singapore-based payment acquirer and processor 2C2P, a deal which Hang described as “a crucial piece” to expand its merchants base in the region.

2C2P helps enterprises in Southeast Asia move money across borders and has a presence in key markets, including Thailand, Singapore and Malaysia. It provides services such as payment acceptance, issuing and pay-out.

As part of the deal, a strategic partnership between Ant Group and 2C2P was formed to connect the latter’s extensive pool of merchants and brands with Alipay+.

Most recently, the firm signed a deal with Indonesian fintech company Akulaku, adding another company into the Alipay+ ecosystem. The partnership brought the total number of digital partners to the Alipay+ ecosystem to 13, according to Nikkei Asia.

Akulaku’s BNPL Solution Now Among Payment Methods Supported by Alipay+

Akulaku’s BNPL Solution Now Among Payment Methods Supported by Alipay+

Digital wallets part of the Alipay+ ecosystem include Touch ‘n Go eWallet (Malaysia), KakaoPay (South Korea), GCash (Philippines), Alipay HK (Hong Kong), TrueMoney (Thailand), bKash (Bangladesh) and EZ-Link (Singapore). Many of these companies are ventures Ant Group has made investments into.

Ant Group’s focus on the Southeast Asian market comes at a time when Beijing is increasing its oversight of China’s digital payments and tech sectors.

The crackdown, which started in 2020, has forced Ant Group to revamp its business by selling stakes in top-performing units like lending and credit scoring to other groups, including state-owned companies. It also had to shrink some of its operations, including its flagship money market fund, Yu’e Bao, which was once the world’s largest.

In November 2020, Ant Group had to suspend its highly-anticipated initial public offering (IPO). The IPO was set to raise US$34.5 billion in the world’s largest IPO at the time, valuing the company at US$313 billion.

With massive smartphone penetration, relatively low banking penetration and over 600 million young emerging consumers, Southeast Asia has become a top target for consumer fintech companies.

According to Chris Yeo, CEO of Indonesia’s payment platform Doku, more than six in ten people in Southeast Asia are still unbanked, and only about 17% of transactions are cashless, leaving plenty of opportunities in the digital payments and finance space.

Market intelligence and research the International Data Corporate (IDC) estimates that 250 million people in Southeast Asia will be using mobile wallets for the first time by 2025. By then, digital payments will be accounting for 91% of total e-commerce payments.

Besides expanding the reach of its Alipay+ digital payment and commerce offering, Ant Group is also pursuing digital banking opportunities. In 2020, it became one of the two groups to receive a wholesale digital banking license from the Monetary Authority of Singapore (MAS), allowing it to serve small and midsized firms and other non-retail segments. Ant Group subsequently soft-launched the Anext Bank in June 2022, a digital bank focusing on providing financial services for small- and medium-size enterprises (SMEs).

Other ongoing projects include a tie-up with Malaysia’s Kenanga Investment Bank to launch a wealth super app for the domestic market, as well as a partnership with Proxtera in Singapore to create an open framework for collaboration with financial institutions.

Featured image credit: edited from Pixabay

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