China’s mighty Ant prepares to take on the world

Alipay is Ant’s biggest and most profitable unit, as its core business is processing payments through Alibaba sites. About 400 million people use it, accounting for about 58 percent of China’s online payment transactions.

However, Ant’s vision goes well beyond online payments.  When Ant was launched executives explained that they planned to turn Alipay’s mobile payment app into “a fully-fledged, data-driven commercial platform” using their massive database that tracks individual shopping habits to launch promotions and financial services. Clearly this has the potential to make big inroads into traditional banking business such as payments and transactions.

Ant is already well advanced to achieving these goals as it expands to offline as well as online payments. In China it is processing payments for more than 200,000 offline merchants and 500,000 taxis, while globally it is forming partnerships with payment, ecommerce and technology companies that can provide it with a platform for expansion. Already there are around 2,000 overseas merchants in more than 30 countries using Ant’s payment system. 

In India it has invested in an e-commerce and payments business, and in Europe it is forming partnerships with payment providers to tap into their networks of offline merchants. In Germany shoppers will be able to make offline payments by scanning a QR code using the Alipay app, a system which is already very familiar to Chinese tourists, the initial target market.  It has also formed a collaboration with Uber Technologies so that Alipay users can use the app to pay for rides in more than 60 countries. 

It is also making inroads into wealth management and business loans, other mainstays of traditional banks. It has invested in China Investment Corp (CIC) and CCB Trust, a subsidiary of China Construction Bank, and is backed by insurance companies and other investment firms.

Ant is tapping into a massive global trend as people switch to new patterns of online consumption. Whereas in 2006 only 0.3 percent of overall retail consumption in China was online, by the end of last year this had risen to 12.7 percent. The company also sees fantastic opportunities in the rising trend of virtual-reality consumption.

Investors certainly seem to recognize Ant’s huge potential.  In April Ant raised $4.5 billion from private investors and plans a joint listing later this year on the Shanghai and Hong Kong stock exchanges.

When Alibaba listed on the New York Stock Exchange in 2014 it broke records by becoming the largest IPO in history. When Ant lists it will be the largest internet company on the Shanghai Stock Exchange and is expected to be the highest value IPO since 2010 when Agricultural Bank of China listed.