Ant Financial, which operates China's popular Alipay wallet, has a plan for the U.S. that goes beyond its abandoned purchase of MoneyGram.

That deal fell through after pushback from the U.S. Committee on Foreign Investment, but it was far from the first move Ant made in the U.S. — and it was never meant to be the last.

Ant's U.S. efforts have long focused on partnerships to support Chinese visitors' ability to use their Alipay wallets at U.S. merchants. This strategy may seem unusual to the likes of Mastercard and Visa, which typically build an actual domestic market for their networks, but it is nevertheless a sizable and lucrative opportunity.

Ant Financial's mascot
The mascot of Ant Financial, which operates Alipay. Bloomberg News

With Chinese travelers, "there's enough to keep us busy in the market that we are going after," said Souheil Badran, president of Alipay in the Americas.

The U.S. hosts a lot of travelers from China—more than 3 million per year and growing quickly. There are also about 350,000 college students in the U.S. who came from China. Further, a significant number of professionals from China are living in the U.S. for long-term business purposes.

In its native China, Alipay enjoys a huge domestic customer base of more than a half-billion users. In other countries, Ant has made deals with merchants and banks, and has a distribution partnership with the American processor First Data. Ant teamed with Verifone to make Alipay an option for taxis in New York and Las Vegas; it also plans to continue partnering with MoneyGram despite their failed attempt to merge.

These moves caused speculation that Ant wants to build a U.S. domestic market to take on companies like PayPal directly, particularly since these deals open a huge addressable market in the U.S. Ant's deal with First Data, for example, covers all of First Data's Clover point of sale network.

But Ant is focused on building relationships, or maintaining existing relationships with users from China, rather than building a digital wallet for U.S. citizens. The stance fits with Alipay's broader strategy of not being a rival to existing payment systems, but providing a niche-focused added alternative for merchants.

"We're in airports, food, lodging, etc.," Badran said. "Eighty percent of Chinese travelers like to buy duty free on their way back to China, so we're in a lot of airports, as opposed to being in every store."

The U.S. market is filled with household brands, making it hard for non-U.S. companies to catch on.

The dominance of card-based payments in the U.S. makes it very difficult for an alternative payments offering to gain traction in the U.S. market, or other markets with established card based ecosystems, said Thad Peterson, a senior analyst at Aite Group.

"Alipay and WeChat Pay run on completely different rails than card-based offerings, and it would be difficult to establish traction in established card markets," Peterson said. "Mobile money offerings are quickly adopted in markets without a substantial card-based infrastructure, or where traditional banking products are the domain of more affluent customers, leaving a large group of unbanked customers few options outside of cash."

WeChat, another large Chinese payment company, has also focused mostly on the travel and temporary resident market for its WeChat Pay offering outside of China.

"The U.S. market is very mature, so that's why we're focused on acceptance for Chinese consumers," Badran said. "We don't need to be in every city and every street corner."

Ant's strategy is most visible in its recent partnership with iFresh, a grocery chain and online grocer that focuses on the Asian-American population. iFresh will provide Alipay services online and in stores through CITCON, a cross-border mobile payment and marketing provider that connects merchants with Chinese mobile wallet users.

iFresh is headquartered in Queens, N.Y., and has locations through the Eastern seaboard in areas with a high concentration of Asian-Americans. While iFresh is an American retailer, Badran envisions Alipay serving iFresh customers who are students, travelers and businesspeople.

"This is for tourists, and also people who may be here for more than just a few days," Badran said. "They're looking for food that will be a comfort for them."

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