Kakao Pay, Alipay form a strategic partnership
Apart from the strategic partnership, Ant Financial will invest $200 million in Kakao’s mobile payment unit Kakao Pay, which is scheduled for spin-off as an independent subsidiary in April. Ant Financial will be Kakao Pay’s second largest shareholder following Kakao after the spin-off.
For Kakao Pay, whose customer base is mainly in Korea, the deal with Ant Financial is a huge push toward expanding its presence in the global fintech industry. China is a particularly significant market in the industry because of its size and growth potential. Alipay controls half the pie in China’s mobile payment market, but faces increasing domestic competition from Tencent’s WeChat Pay.
Ant Financial runs a wide variety of fintech services from hotel or movie reservations to private asset management and has a customer base of 450 million users worldwide. Kakao Pay has a much smaller pool of 14 million users.
Under the agreement, Kakao Pay and Alipay will share partners, consequently expanding the range of merchants their users can reach both online and in brick-and-mortar stores. The deal will expand Kakao Pay’s market share not only abroad, but also add Alipay’s 34,000 affiliated stores in Korea to Kakao’s 1,700 partners. Kakao Pay users will also be to make quick payments to Alipay affiliates abroad and online including on China’s biggest e-commerce platform, Alibaba.
The agreement will give Alipay users payment access to Kakao Pay’s affiliates as well, which includes retailers, online shopping malls, eateries and even airlines. The partnership is expected to be particularly useful for Korean and Chinese tourists.
“The deal also benefits corporate clients contracted to either Kakao Pay or Alipay two companies,” said Ryu Young-jun, who runs the Kakao Pay team. With payment methods turned easier, consumers are likely to purchase more from platforms that they couldn’t reach before the partnership.
“Considering its quality of fintech services and growth potential, Korea is a strategically important market for Ant Financial’s global strategy,” said Douglas Feagin, president of Ant Financial International. “Kakao is evidently an important player in Korea’s fintech industry and we’re looking forward to open new business opportunities based on our technology combined.”
The timeline for the rollout hasn’t been decided. Kakao said in January it would spin off Kakao Pay in April. Vice President Ryu Young-joon of Kakao’s fintech unit will serve as CEO starting in April. Ryu has been part of Kakao Pay since its beginning in 2014.
BY SONG KYOUNG-SON [firstname.lastname@example.org]
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