6 China fintech moves with global implications

As more of China's citizens engage in travel and commerce across the nation's borders, more companies want to help them pay and collect money. Many of China's dominant payment brands are extending their reach globally, but U.S. and European companies are also focused on this audience.

Fintech's focus on China
As more of China's citizens engage in travel and commerce across the nation's borders, more companies want to help them pay and collect money. Many of China's dominant payment brands are extending their reach globally, but U.S. and European companies are also focused on this audience.
Moneygram sign
MoneyGram's suitors
China's Ant Financial, the Alibaba affiliate responsible for AliPay, has reached a deal to buy Dallas-based MoneyGram, but such a bold move hasn't gone unchallenged.

Kansas-based Euronet is offering to pay $15.20 for each MoneyGram common share and preferred stock and assume about $940 million of MoneyGram’s outstanding debt, topping Ant Financial’s offer of $13.25 per share by about 15%.

And while Ant is reportedly considering a higher offer, U.S. lawmakers have thrown up a roadblock by requesting an investigation of the Ant-MoneyGram deal.
office of paytm operator One97
Ant's other ambitions
MoneyGram isn't the only foreign company on Ant's radar. Earlier this year, the Alibaba affiliate bought stakes in two digital payment firms: South Korea’s Kakao Pay and the Philippines’ Mynt.

These moves may have been a result of Ant's decision to raise just shy of $3 billion by issuing debt to fund its acquisition activity.

Alibaba also raised its stake in India's Paytm last month, spearheading a $200 million funding round. Alibaba and Ant already had a significant investment behind Paytm, having spent more than a billion dollars to acquire a 40% stake in the Indian firm.
WeChat logo
Tencent in Europe
An estimated 300 million consumers in China have Tencent's WeChat Pay app loaded on their phones, and many of them travel to the U.K. and other parts of Europe.

Tencent is working with London-based Tramonex and Hong Kong-based payment gateway partner Valoot Technologies to extend its reach to Europe.

"We were in a situation not that many months ago that we knew this was huge, but didn't know how to approach it," said Ovidiu Olea, founder and CEO of Valoot.

The partnership creates a scenario in which WeChat operates like a card scheme, Tramonex becomes the acquirer and Valoot provides the payment gateway and handles marketing of the new service.

"A lot of this will be driven by WeChat operator Tencent Holdings in China, as every decision has to be run by them as they get their brand out to other parts of the world," Olea said.
china unionpay
Travel opportunity
The growing number of Chinese consumers traveling to the U.S. and other countries is becoming a two-for-one opportunity for payment companies. The market's gigantic and growing — and it has a lot of trouble executing transactions.

For many Chinese travelers today, "transactions redirect to a hosted payment system that's in China," said Paul Levine, a senior vice president at Planet Payment. "That comes with a lot of issues."

Removing friction from the payment transaction trail for Chinese travelers, particularly for card not present transactions, has almost become a category in and of itself. Planet Payment, for example, has entered a collaboration with UnionPay International and United Airlines to handle reservations and other ticketing purchases either online or through call centers.

The integration allows travelers to use UnionPay to book directly with United, avoiding the workaround to execute cross-border payments between China and the U.S. That helps reduce transaction abandonment by improving the user experience, Levine said.
Air China aircraft
Up in the Air
Ingenico ePayments, the online and mobile commerce division of France's Ingenico, signed an agreement in March with Air China to accept Discover Card payments in North America, a key market for the Beijing-based airline, with plans to expand to other regions later this year.

The agreement gives Air China, the flag-carrier airline for the People’s Republic of China, the capability to accept all Discover Global Network cards, including Diners Club, and those of Discover’s network alliance partners BC Global Card, RuPay and Elo, Ingenico said.

The deal builds on a previous agreement Air China had with Discover to accept its Diners Club brand in Japan. Air China now plans to expand acceptance of Discover and Diners Club cards in additional countries this year, according to the press release.
online shopping concept
Selling into China
There's been a lot of funding flowing into technology that targets the spending of Chinese travelers as they visit other countries. But this narrow use case isn't the only opportunity for investment and innovation.

CLSA Capital Partners has made an investment in Azoya, a Shenzhen, China-based e-commerce companies that manages payments and other functions on behalf of foreign retailers wishing to sell into China.

There is a clear opportunity, if not a necessity, for merchants to sell inside China. It's a huge market that consistently sets e-commerce records and an appetite for mobile technology.

"The Chinese payments market has been rather closed for many years and has been notoriously difficult to enter for Western companies," said Zil Bareisis, a senior analyst at Celent. "While it's opened up a bit in recent years, it remains a complex market with dominant local players and its own set of regulations, so local partnerships can be crucial to success."

Azoya attempts to circumvent that by being the merchant of record for local transactions, then relying on its existing relationships with UnionPay and Alipay to smooth issues such as compliance and the original merchant's need for a relationship with a Chinese card issuer, UnionPay or Alipay.