Ant Group’s WorldFirst Increases Footprint in Southeast Asia – Alibaba Gr Holding (NYSE:BABA)

Key takeaways:

• WorldFirst to expand its cross-border payments and financial services to four new Southeast Asian countries by 2024
• The company’s Singapore-based clients reported a 70% increase in their monthly GMV between January and October

By Teri Yu

Ant group, best known for its Alipay super app, is venturing further into the world with a new phase of its international expansion. This time the move comes from its WorldFirst subsidiary, a lesser-known entity that focuses on global payment services for small and medium-sized enterprise (SME) merchants in the cross-border commerce that forms the backbone of many online marketplaces.

WorldFirst will introduce its suite of cross-border payment solutions to four more countries in Southeast Asia, namely Vietnam, Thailand, the Philippines and Malaysia, the company announced on Tuesday. WorldFirst has already launched its services in Southeast Asia with operations in Singapore, complementing its presence in China, Europe and other markets. The company said it aims to establish operations and begin offering services in the four new markets by 2024.

With the move, Ant hopes to capitalize on the huge potential of Southeast Asia’s e-commerce market. The region’s population of over 600 million is becoming increasingly affluent and tech-savvy, and many are beginning to shop online. Since the pandemic began, some 70 million people in just six countries around the region have shopped online for the first time, according to a recent study by the EU-Asian Business Council. It added that the region’s digital consumer population will reach 380 million by 2026, with its annual gross e-commerce value (GMV) exceeding US$250 billion by then, representing 14% annual growth over the five years from 2021.

The e-commerce explosion presents both challenges and opportunities for small merchants looking to tap into the market – a gap that WorldFirst and its colleagues hope to fill. In addition to the challenge of setting up shop in different countries and marketplaces, merchants also need to find reliable ways to complete and process their cross-border transactions using reputable payment service providers.

“Building on our global fintech capabilities and strong successes in China, Singapore and other markets, we are confident that our secure and fast cross-border payment and e-commerce services can help small businesses in Southeast Asia expand their international footprint,” said WorldFirst CEO Clara Shi, who is also the vice president of Ant Group.

Before diving deeper into WorldFirst’s latest expansion, we’ll briefly go back to what this UK-founded fintech company actually does and how it became part of Ant Group, the financial services subsidiary of The Alibaba Group (NYSE:BABA), China’s e-commerce conglomerate.

WorldFirst is actually quite the fintech veteran, founded in 2004 in London and growing rapidly since then to become a major player in cross-border digital payment services. The company was acquired by Ant in a deal reportedly worth $700 million in 2019, marking the latter’s biggest move into international markets at the time. The acquisition was intended to take Ant further into the fast-growing cross-border e-commerce segment, leveraging Alibaba’s broader ecosystem where merchants are increasingly selling their goods overseas and need extensive payment support.

Asia has grown to become an important market for WorldFirst and accounts for a large portion of its revenue. The company also released some data for its Singapore operations, saying the volume of monthly payment transactions for its SME customers’ online stores in the Lion City increased by 70% between October and January 2023.

Globally focused

WorldFirst says it targets online merchants who require fast and reliable cross-border payment and financial services with a single connection across multiple global marketplaces, with the aim of helping SMEs overcome barriers to their global transactions. By creating a “world account”, traders can conduct global fund raising, currency conversion, risk management and supply chain financing with up to 42 currencies in over 200 global markets.

WorldFirst says small businesses can open an account within minutes to start trading globally, and international payments can be instant if both parties are on their platform. The company has served 1 million customers worldwide and is connected to over 120 marketplaces.

WorldFirst is a key part of the international arm of Ant Group, which originally aimed to list in Hong Kong and Shanghai in 2020 before the plan was scrapped. Ant began as part of Alibaba and was later spun off, although Alibaba continues to hold 33% of the company. That relationship has been lucrative for Alibaba, which took in over $1.4 billion in profit from Ant for its most recent fiscal year that ended March 31.

Ant’s IPO came back into the spotlight earlier this year when Alibaba announced plans to spin off its six remaining main businesses into separate, independently managed companies.

Aside from its efforts with WorldFirst, Ant Group has aggressively expanded its Alipay+ to various markets as part of its globalization drive. Alipay+ uses its own set of global cross-border digital payment and marketing solutions to connect a wide range of digital wallets from different countries, allowing consumers to use their digital wallets at home even when traveling abroad.

Alipay+ Cross-Border Mobile Payment Service connects over 88 million merchants to 1.5 billion consumer accounts on over 25 e-wallets and banking apps in 57 countries and regions. In large part, its success is leveraging Ant Group’s success in China with Alipay, one of the two payment apps in China that together process over 98% of China’s mobile payments.

In addition to its core payment services, WorldFirst last year began offering other value-added services to support small and medium-sized businesses with their e-commerce endeavors.

It includes the company’s “Global Voyage Program”, with partnerships in 28 leading international e-commerce marketplaces including Amazon, Shein, Google, AliExpress and Shopify. That program offers one-stop store opening services, along with other merchant support services such as online advertising, logistics, and web development and management.

WorldFirst is seeing growing regionalization across various emerging markets, such as Southeast Asia, Latin America, Africa and the Middle East, which has brought accelerated growth for its clients, its CEO Shi said in a recent interview. Transaction volumes in emerging markets on the WorldFirst platform grew by 36% between the second half of 2022 and the first half of 2023, far exceeding the 6% growth seen in more developed markets.