Tencent & Alibaba chase remittances in conflict for Southeast Asia

Tencent & Alibaba chase remittances in conflict for Southeast Asia


JAKARTA/HONG KONG : For Chinese tech giants Alibaba and Tencent, Southeast Asian domestic helpers in Hong Kong may additionally prove key to their world ambitions in financial services.
We Remit volunteer Jona de Cuia chats with Joslyn Pimentero, a domestic helper, at the financial Central district in Hong Kong, China September 2, 2018.

Both businesses lately launched money-transfer offerings that allow Hong Kong-based workers from Indonesia and the Philippines to ship money home cheaply and easily. The strikes are a first step in going after a global remittance enterprise that strikes extra than $600 billion round the world annually.

But the initiatives are additionally phase of the firms’ broader efforts to take their wildly successful WeChat Pay and Alipay mobile fee gadget overseas.

Southeast Asia, with a growing populace of 600 million people who ordinarily lack financial institution accounts, is a strategic battleground for Asian tech behemoths and their U.S rivals.

Alibaba’s monetary affiliate Ant Financial called its Hong Kong remittance initiative “a beginning point and sizeable step in accelerating our pace to promote economic inclusion globally.”


Tencent’s WeChat Pay, which is ubiquitous in China however has struggled to gain traction abroad outdoor of Chinese tourist destinations, is extra circumspect about the goals for its Hong Kong We Remit service, though a spokesman allowed it was open to “all possibilities.”

Sending money across borders, however, is harder than it looks. That helps explain why each agencies are working with a Hong Kong-based economic technological know-how start-up, EMQ, which has regulatory approvals and bank partnerships in vicinity across Southeast Asia and elsewhere.

“We are the pipes and distribution for Tencent,” stated EMQ CEO Max Liu. He declined to comment on any relationship with Ant Financial, however three sources with know-how of the count instructed Reuters that Ant Financial is creating its own partnership with EMQ as phase of a suite of new cross-border fee efforts. Ant Financial declined to comment.

The “pipes” are only section of the challenge. Reuters interviewed six Filipino and Indonesian home people in Hong Kong who stated it would take time to get their households to have confidence receiving remittances by way of their mobile phones.

Indeed, We Remit doesn’t currently link up to mobile cellphone wallets. Instead, recipients select up dollars at banks or pawnshops, just as they’ve traditionally executed with services from market leaders Moneygram and Western Union.

For the senders, the new offerings can be a revelation. For years, the only way Filipino maid Rochelle Bumanglag should send money home was by using spending her off days on Sunday ready hours at banks and remittances stores in downtown Hong Kong.
Domestic helpers line up for remittance offerings inner World Wide Plaza at the financial Central district in Hong Kong, China September 2, 2018.

“When I go to a bank, it’s a lot of queuing and a lot of hassle. WeChat, they continually give us a appropriate rate. It’s very convenient, very fast. I go to 7-11 and put cash in my account,” the 42-year historical said.

Another massive attraction: neither WeChat nor Alipay are charging fees, at least for now.

“The WeChat fee is 6.80 peso to the HKD (Hong Kong dollar), whereas the bank’s charge is 6.79 pesos plus a HK$25 ($3.20) cable charge. It’s a big difference for us,” stated Bumanglag, who sends about 10,000 pesos, or about HK$1,470, a month home.

Filipinos and Indonesian make up most of Hong Kong’s 370,000 home workers, according to authorities data. The two nations are amongst the world’s pinnacle recipients of cash transfers: The Philippines received $32.8 billion in remittances in 2017, whilst Indonesia had $9 billion, according to the World Bank. Over $16.9 billion in remittances flew thru Hong Kong the identical year.

Global remittances to low and middle-income countries by myself are anticipated to attain 485 billion in 2018.


The scale of the market helps explain why Alibaba sought to gather Moneygram ultimate yr in an $880 million deal that was eventually scuttled by means of U.S. regulators.

Together with U.S.-based Western Union, Moneygram has lengthy been a dominant player in a enterprise that’s traditionally depended on massive physical networks of neighborhood retailers ranging from banks to comfort stores and pawnshops.

Those highly-priced networks, collectively with elaborate compliance requirements and different technical and regulatory hurdles, have supposed high fees, often for these who can least find the money for it. Reuters discovered that remittance prices in Hong Kong begin at HK$15 and can vary to as high as HK$200, with additional costs once in a while in embedded in negative exchange rates.

For now, WeChat and Alipay are centered on gaining acceptance. WeChat grew to be operational in Hong Kong ultimate year, working with EMQ and other partners including famous Filipino pawnshop chains Cebuana and Palawan.

Ant Financial’s venture, launched via its Alipay HK affiliate and primarily based on blockchain software, commenced moving cash between Hong Kong and the Philippines in late June. Unlike We Remit, it approves real-time transfers between Alipay HK accounts and the Filipino cell repayments provider Gcash, which Ant Financial partly owns and which is operated through telecommunications firm Globe Telecom. [L4N1TR3JW]

Sources say the Hong Kong initiative isn’t Alipay’s only pass in remittances. Job commercials in September for Ant Financial’s Malaysia workplace listed remittances as a responsibility.

The company has launched joint ventures in seven markets for neighborhood digital repayments services, which function independently below the partnerships’ manufacturer names, including in Indonesia and Malaysia.

Analysts say that AlipayHK’s remittance tie-up with Gcash should be replicated in other markets.

“Ant Financial’s eventual goal is to create a international price gadget for its consumers,” said Zennon Kapron, director of fintech consultancy Kapronasia.

“The first focus was following Chinese customers, the second used to be expanding merchant acceptance past traditional traveler destinations, and the third is for neighborhood value wallets.”

Ant Financial raised $14 billion in June, earmarked for its international expansion.

EMQ’s community suggests the place Tencent and Ant ought to be going. The employer has regulatory approvals in Vietnam, Cambodia, India, Singapore, China and Japan, which would allow purchasers to shortly scale up their operations.

The startup is in the middle of expanding to the Middle East and has a partnership with Chinese economic technological know-how startup QFPay, whose point-of-sale terminals are used with the aid of Alipay and WeChat Pay in the mainland.

Alibaba and Tencent face plenty of competition in remittances, no longer to point out the lengthy listing of technological know-how and financial services agencies that purpose to compete greater generally in payments.

Moneygram head for Asia Yogesh Sangle instructed Reuters it would difficult for any corporation to equal Moneygram’s international network of companions throughout 200 countries. And the incumbents have their very own tech initiatives too: Moneygram commenced a partnership with Gcash in February, while WeChat Pay is working with Western Union on a carrier for Chinese college students abroad. two

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