China’s Ant Financial buys stake in fintech Wave Money
- Online Date: 2020/05/18
- Modify Date: 2020/05/19
Source: The Myanmar Times / THOMPSON CHAU / May. 18, 2020
China’s Ant Financial, a fintech affiliate of e-commerce giant Alibaba Group Holding, is set to acquire a minority stake in Wave Money, a Myanmar mobile payment firm.
Wave Money said on Monday (May 18) that Ant Financial Services Group plans to invest US$73.5 million by way of a new share issue. The deal aims to tap into Myanmar’s vast unbanked population in rural areas.
A joint venture between Norwegian Telenor Group and the Yoma Group, comprising Singapore-listed Yoma Strategic and Yoma Bank, Wave Money is the largest mobile payment services provider in the Southeast Asian country. After the transaction, Yoma Strategic and Yoma Bank will hold 29.5 percent and 3.4pc in the firm respectively, while the holdings of Telenor and Ant Financial have not been made public.
Hangzhou-based Ant runs Alibaba’s payment business Alipay and offers savings and credit products to the platform’s users. When approved, it would be Ant’s 10th mobile wallet partnership outside China, allowing the firm to enter Myanmar’s nascent market of nearly 55 million people, and where the potential of e-commerce growth is supported by its high mobile penetration rate.
“The partnership will enable Wave Pay to tap into the experience of Alipay to promote financial inclusion and better serve the unbanked and underbanked individuals and small and medium-sized enterprises in Myanmar,” said Eric Jing, Ant’s executive chair.
In Myanmar, still largely a cash-based economy, the COVID-19 pandemic has forced individuals, employers and businesses to move online, driving the growth of e-commerce and e-services.
Yoma Strategic CEO Melvyn Pun expects the deal to “massively boost Wave Money’s capabilities to support these trends.”
“The Myanmar government and private sector are accelerating their digitalisation drive. Pension payments, household subsidies, loan collection and bill payments are all being pushed electronically. The major trend will only accelerate when habits are formed and the convenience becomes obvious,” Mr Pun told The Myanmar Times.
DBS analyst Derek Tan said Ant’s expertise and financial muscle will help Wave Money consolidate its position as the leading digital service provider and grow its e-wallet market share. But he added that “the journey is still long.”
Local banks are stepping up their game in the race to be the country’s go-to mobile service provider. Last month Thailand’s Kasikornbank bought a 35pc stake in Ayeyarwaddy Farmers Development Bank to expand into the retail market with a focus on digital services.
Significant risks remain. The ongoing internet shutdown in the restive states of Rakhine and Chin, which will enter its eleventh month on Thursday (May 21), raises doubts over whether users in Myanmar can rely on mobile money and other forms of e-services.
There is also the question of respecting data privacy. Ant was rebuked by China’s data protection authority in 2018 for automatically enrolling its then 520 million users in its credit-scoring system and violating China’s national data protection standard. Myanmar currently has no laws or regulations on privacy protection.
Mr Tan of DBS said the absence of banking facilities for the vast rural population supported by a high mobile penetration rate will mean that the opportunities “far outweigh” the risks at this stage.
Wave Money runs a network of more than 57,000 agents across 295 out of 330 townships in the country. Its 2019 transfer volume exceeded US$4.3 billion.