In the global mobile payments landscape, there is a clear distinction between the evolution of mobile payments in developed and developing economies, as well as in how mobile payment platforms spread internationally.
Some have pursued expansion in a brand-focused, centralized manner, while others have sought international growth via relationships with local partners. Ant Financial, Alipay’s parent company, has made headlines with its recent international moves outside China – and these moves reveal a very different approach from how brands such as PayPal and Apple have dealt with international expansion.
Ant Financial has sealed a number of partnerships in recent months, including a bid to purchase MoneyGram in the US, currently pending regulatory approval. Ant Financial has also upped its stake in India’s mobile payments leader Paytm to 40%, as well as investing $200m in a technological collaboration with Korea’s Kakao Pay. In other developing markets, Ant Financial has taken a stake in Mynt in the Philippines, as well as in Ascent Money, a Thailand-based fintech company that operates in several other markets across Southeast Asia. Ant Financial has also teamed up with Indonesia’s most popular messenger app BlackBerry Messenger to help develop and integrate mobile payment and e-commerce services onto the platform.
In contrast, mobile payment service providers in developed economies have relied on strong brand identities to expand organically. However, in their international expansion journeys so far, the likes of PayPal have only been able to tackle Western markets, where they can most effectively leverage this brand strength.
Compared to the rapid expansion of Alipay internationally, Western players appear slow and overly cautious. The most distinctive difference in Alipay’s approach compared to that of PayPal and Apple Pay is that it is not pushing its own brand into new territories. While Alipay does not have the global brand recognition that PayPal and Apple do, the reason for this strategy is that Ant Financial acknowledges that local digital economy participants understand their local markets better. It is also easier to collaborate with local fintech providers, as this greatly reduces the cost of getting involved in a market.
Developing markets are all at very different levels of development with different market environments; if it isn’t possible to fight market incumbents, join them.
By Arnie Cho, Senior Consumer Payments Analyst