Alibaba Buys WorldFirst For US$700Million

Online retail giant Alibaba has thrown its hat into the money transfer business with its purchase of London-based payments and remittance servicing company WorldFirst for a reported $700M. The purchase was done through Ant Financial, the financial services arm of Alibaba.

In a statement to its customers, WorldFirst officially confirmed the purchase by Ant Financial and validated reports circulating last December that both companies were in negotiations for a possible acquisition for an estimated $717 Million or GBP550 Million.

The acquisition more than just signified Alibaba’s foray into the money transfer business. It also highlighted the growing relationship between the European and Chinese markets.

In addition, the purchase of WorldFirst which has been in business for more than 15 years has put the small-scale payment services companies under the microscope. Amazon has started its own remittance service business and there is a burgeoning industry of money transfer proprietors in Asia.

WorldFirst gained prominence as a company that provided customers – private individuals and businesses – a platform to exchange currencies and remit payment at prices that were much lower than those offered by traditional retail banks.

According to WorldFirst, since it started operations in 2004, the company has handled over $90 Billion worth of transfers. The company also claims that it has averaged in excess of one million transfers every year.

The online remittance and money transfer market is hugely patronized by overseas workers who have to make regular payments to their families.

Ant Financial runs the Alipay service, a mobile app that allows its more than 550 million users to make payments. Alipay is the number one payment service app in China.

Alibaba owns a third of Ant Financial which has been estimated to be valued at $150 Billion. The company has been trying to expand its service coverage to Europe and other parts of the world.

WorldFirst co-founder and CEO, Jonathan Quin, believes that the acquisition of his company by Ant Financial represents a synergy of their respective goals and capabilities. After all, many UK merchants already recognize Alipay.

Quin confirmed that WorldFirst will continue to maintain its brand and will eventually become a wholly-owned subsidiary under Ant Financial.

For Ant Financial, the tie-up with WorldFirst will provide greater value to Alipay’s current line of services.

Sources report that the acquisition became of great importance to WorldFirst which had been funded for years by private investors. WorldFirst’s annual GMV is estimated to be $10 Billion.

Amazon’s introduction of its own payment service, Amazon Currency Converter for Sellers, sent shockwaves across the online money transfer industry. With the service, customers of Amazon no longer have to use other money transfer services like those of WorldFirst.

Amazon also introduced Amazon PayCode. This is a tie-up with Western Union that allows people where Amazon is not operating at to pay for its merchandise using local currencies.

Amazon PayCode has seen action in Kenya and Thailand. The service appears to have affected the performance of Alipay and other money transfer service providers.

Then, there is the matter of growing competition from other small-scale money transfer companies such as AirWallex and PingPong. The combination of these factors has contributed to the slowdown in WorldFirst’s growth.

The decision to acquire WorldFirst is seen to boost the international presence of Ant Financial by giving it a foothold in the lucrative European market. It also comes at a time when Ant Financial has made costly mistakes trying to expand its services around the globe.

One such stumble was its failure to buy MoneyGram in 2017 for a reported $1.2 Billion. The deal met resistance from the United States government and Ant Financial had to forego its acquisition of MoneyGram which is listed in the Nasdaq.

For its part, WorldFirst made its own moves to expand outside the confines of the United Kingdom with its proposed acquisition of US-based startup Wyre.

Wyre which is headquartered in San Francisco specializes in blockchain technology intended to shift the company’s focus toward currency exchange API service to B2B customers.

A few months after its purchase of Wyre, WorldFirst announced that it would shut down the service. Sources believed that the decision was a response to Ant Financial’s failure to secure MoneyGram.

Ant Financial has been aggressive in its expansion within Southeast Asia. The company has invested an estimated $200 Million into a Korean company, Kakao Pay. Ant Financial hopes its moves can repeat the same success as Alipay in China.

Recently, Alipay announced that it plans to introduce its services to U.S Walgreens outlets. Point-of-Sale company First Data included Alipay as a payment option to Stateside. Likewise, Alipay has made similar ventures and partnerships in Asia and Europe.