Ant Financial, the payments affiliate of Alibaba Group Holding Ltd., acquired EyeVerify Inc., to expand services using the U.S. startup’s biometric authentication technology for securing consumers’ online data and transactions.
Ant is paying about $70 million for the Kansas City, Missouri-based company, according to a person familiar with the matter who asked not to be named because the details are private. EyeVerify, which uses pictures of the human eyeball to unlock mobile services, will become a wholly-owned unit of Ant Financial, according to a statement from the company.
As its first investment in the U.S., Ant plans to use the technology to upgrade its own security systems and could eventually apply it to a future U.S.-targeted product. Formally known as Zhejiang Ant Small & Micro Financial Services Group, the Chinese company began using EyeVerify’s EyePrint ID on its payment authentication platform earlier this year. With 450 million customers and services spanning online payments platform Alipay, peer-to-peer lending and wealth management funds, Ant plans to integrate EyeVerify’s technology into more of its products.
“Acquiring a leading company like EyeVerify is a natural step for us to further invest in this very important area while taking a lead in this area globally,” Jason Lu, vice president of fraud risk management at Ant Financial, said in an interview. "Full integration will allow us to move faster and agile in a way that we can apply the technology in China and globalization strategy in India, and places where Alipay will expand into the next few years."
EyeVerify checks identities through eye-vein patterns and creates a digital key equal to a 50-character complex password. Users hold their smartphone about 12 inches from their face so a picture can be taken, opening up apps or websites on their device. The company touts the technology as more than 99.99 percent accurate, making passwords a thing of the past.
Founded in 2012, the startup has raised $13 million in funding from backers that include Wells Fargo & Co., Samsung Electronics Co., Sprint Corp., and Chinese security giant Qihoo 360 Technology Co. More than a dozen financial institutions use its technology.
Biometric features, such as fingerprints and voice recognition, are being used by more than 35 banks banks and technology companies to safeguard accounts. Samsung’s Note 7 smartphone can be unlocked with an iris-reading camera.
Ant Financial’s deal comes as Alibaba increases its profile in Silicon Valley with investments including Snapchat Inc., mobile search provider Quixey Inc., and ride-hailing service Lyft. So far the e-commerce giant’s forays in the U.S. are focused on helping western companies reach Chinese consumers through services like Alipay and Tmall, a site for businesses to sell brand name goods in China, rather than compete head-on with the likes of Amazon.com Inc. or PayPal.
Ant Financial’s immediate priority in the U.S. is to win acceptance from American merchants so that Chinese consumers can use Alipay wherever they travel. The company says Alipay is already accepted by more than 70,000 off-line retailers in more than 70 countries and regions. Earlier this year, Uber agreed to let customers pay for their rides using Alipay in more than 400 cities.
Lu says that eventually, Ant Financial wants to reach up to 2 billion customers around the world.
"The U.S. customer has a lot of ideas about how Apple Pay works," Lu said. "I think what we are going to provide is a similar, very highly secure and highly convenient experience for the U.S. customer and for our customers globally."
For now, Ant Financial is taking a very slow and deliberate approach to the U.S. market, where financial services and online payments are among the most advanced in the world.
Ant, whose name refers to the small vendors that sell goods and services through Alibaba, is considering an initial public offering in Hong Kong in the first half of next year, people familiar with the matter have said. The company was valued at $60 billion in its most recent funding round.