Alipay expands in Europe; Stripe's valuation bouncing back

July 17, 2024 9:53 AM

The Chinese technology giant is partnering with BNP Paribas to reach more merchants; Sequoia makes an investment offer that could boost confidence in Stripe; and more.

Here's what's happening around the world.

Christophe Morin/Bloomberg

Ant, BNP Paribas team to expand payments in Europe

The Chinese technology company Ant and BNP Paribas, one of the European Union's largest banks, are partnering to support cross-border payments and other transaction services for consumers and businesses in Europe.

Ant and the French bank will collaborate on digital payment development, and BNP will work with Alipay, Ant's payments app, to expand Alipay's cross-border features. Other elements of the partnership include BNP sponsoring WorldFirst — Ant's business payment affiliate — for membership in the Single Euro Payments Area. This will enable Ant's clients to make international payments within the zone with the same easy navigation as other SEPA members.

BNP and Ant will also work together to co-develop blockchain-powered payment and tokenized deposits, which enable traditional bank deposits to be converted to digital tokens. That can make it easier to support digital financial services that operate across borders.

"This is a key step in bolstering our service offering while leveraging on each other's strengths to offer our clients the best service when it comes to cross-border payments," said Pierre Fersztand, global head of cash management for payments, trade solutions and factoring at BNP Paribas, in a release.

The partnership enables BNPL and Ant to compete with rivals in several ways. By expanding blockchain and tokenized deposits, BNP can compete with Citigroup, JPMorgan Chase and other large banks that use tokenization for treasury management, large-volume international payments and investment activity.

By scaling digital payments via BNP, Ant and Alipay can improve their ability to compete with PayPal, Block and other payment technology companies that serve both the consumer and business side of payments.

Ant recently agreed to acquire MultiSafePay, a Dutch payments company that can enhance Ant's ability to locally offer e-commerce, payment cards, digital wallet capabilities, buy now/pay later lending, internet and mobile banking.

The BNP partnership and MultiSafePay acquisition enables Ant to expand the services it offers to Chinese travelers and expats while making inroads with Europe-based merchants, while BNP can improve its reach with Asian consumers and businesses.

"Europe is an important region for Ant International, with the rise of cross-border commerce and the increase in travelers to the region," said Douglas Feagin, president of Ant International, in a release. —John Adams

U.K. places fresh pressure on U.S.-led Big Tech payments

The Financial Conduct Authority and the Payments Systems Regulator plan to investigate mobile wallets from large firms such as Apple, Google, and PayPal to determine the apps' impact on consumer choice and the ability of other payment companies to compete.

The regulators contend that digital wallets from large, mostly U.S.-based technology companies cover more than half of the U.K. consumer market. And mobile wallets are the primary point of contact between consumers and other large technology companies, the U.K. regulators added, noting that Big Tech mobile wallets are causing a "seismic shift" in how people pay.

For now, the investigation is limited to fact-finding, with the regulators seeking public input on user experience for the mobile wallets, including how easy or difficult it is to access services from other providers and the ability to execute account-to-account payments between financial institutions.

Regulatory action against large mobile payment apps for allegedly using payment policies to hinder competition is nothing new. Apple settled with the European Commission earlier this month, agreeing to open its payment technology to outside firms, loosening some control Apple has over its technology and checkout fees. Apple agreed to open access to its iPhone technology to outside firms, and reportedly updated that offer to accommodate the EC.That ended the threat of billions of dollars in fines from the EU, but it has also created opportunity for firms such as Samsung and payment technology firm Curve, which are collaborating on a rival to Apple Pay in the European Union and other regions.

The U.S. Department of Justice is investigating Apple, contending that Apple's payment policies for its App Store and ability to access to mobile payment-enabling iPhone technology could adversely impact competition.

Regulators in countries around the world have also targeted Google, Amazon, Meta and other large firms, on issues ranging from antitrust violations to data privacy controls. —John Adams

Stripe's valuation may be recovering

Sequoia Capital has offered to buy $861 million in shares of Stripe, a deal that would value the payments company at $70 billion as the payments industry looks for signs that an industrywide valuation slump of the past few years has bottomed.

The $70 billion valuation would be an increase from Stripe's most recent valuation of $50 billion during the summer of 2023 billion. That was down from a high of about $95 billion, according to Axios, which reported longtime Stripe investor Sequoia is looking to provide returns to its investors as Stripe has delayed a long-rumored IPO. The higher valuation is a vote of confidence in Stripe's financial performance and a bet that the payments company will eventually go public.

Stripe, which is based in San Francisco and Dublin and competes with payment technology firms such as Block and PayPal, as well as traditional processors and bank technology firms, has downsized and revamped its strategy over the past two years. Like most payment technology companies and fintechs that sell to small businesses, Stripe has been challenged to accommodate higher interest rates.

Axios, which based its reporting on Sequoia documents, said the venture capital firm is "highly optimistic" about Stripe's future. Stripe and Sequoia did not provide comment by deadline. —John Adams

Brazil's real-time payment network adds international support

Turkish fintech OpenPayd has added support for Pix, Brazil's real-time payments network, adding another international option to one of the world's largest instant settlement systems.

By accessing Pix through an application programming interface, OpenPayd will sell a menu of real-time payments and embedded financial services that can be accessed through a payments account.

The partnership with Brazil's Pix will enable OpenPayd to expand an international digital payments network that covers more than 190 countries. Clients in these countries can access real-time processing through Pix. Brazil's central bank has made similar deals to provide access to Pix outside of Brazil.

"Enabling access to the world's largest payment rails ensures that our customers' payments can be as wide-reaching and agile as they are," said Mert Aslaner, head of product at OpenPayd, in a release. Brazil's Pix, which launched in 2020, has quickly grown and currently takes up 15% of the world's real-time payments volume, trailing only India, where the United Payments Interface covers about half of the global real-time payments.

Both India and Brazil have much larger real-time payment networks than the U.S., though payment experts say FedNow's impact should drive adoption in coming years as banks enable more uses for real-time payments via FedNow and the bank-led RTP network. —John Adams

Deutsche Bank subsidiary plans early-mover German stablecoin

Asset management firm DWS, which is owned by Deutsche Bank, has created a new company to build a German-regulated cryptocurrency.

The new firm, called AllUnity, will build a stablecoin and attempt to obtain an e-money license from BaFin, Germany's banking regulator. That would create the first cryptocurrency to receive such an approval in Germany, according to Reuters and several local news outlets.

AllUnity anticipates the stablecoin's demand will come from investors that focus on digital assets and companies that have clients or partners that support Internet of Things technology. DWS manages about $1 trillion in assets, creating a large potential market for its stablecoin, which is expected to launch in 2025.

Stablecoins, which are backed by traditional currencies, are designed to avoid the pricing volatility of other cryptocurrencies. They're considered the best bet for payments and other large transfers, and have become popular among card networks and payment companies as a way to bring digital assets to a broader audience. —John Adams

Visa, Wirex push Web3 payments in Europe

Visa and cryptocurrency technology firm Wirex are teaming up to launch the Wirex Pay App in the Eurozone in an effort to expand digital-asset payments in the region.

The collaboration will particularly focus on Web3, which broadly refers to blockchain-enabled Internet technology.

Wirex has existing relationships with Visa as a card issuer. The two firms will integrate blockchain technology with traditional financial systems, enabling users to operate in both environments.

"At a time when the financial world is boldly moving towards Web3 and decentralization, the need for robust solutions for global funds movement remains essential," said Sviatoslav Garal, global head of payments at Wirex, in a release.

Banks and other financial institutions are interested in Web3 as a way to simplify and speed transactions and to reach users in newer digital markets such as NFTs and virtual reality. For Visa, the partnership is an opportunity to add more services beyond traditional card processing as merchant, issuer and consumer needs and tastes evolve to become more digital.

Visa recently introduced the Visa Web3 Loyalty Engagement Solution, which enables merchants to offer "digital collectibles" and virtual experiences as incentives rather than traditional perks like cash back, points and airline mileage. —John Adams

Mastercard expands Middle East strategy via Jordanian digital wallet

Jordan Kuwait Bank and Mastercard have developed eliWallet, an app designed to support virtual and physical cards for e-commerce, in-store commerce, cross-border payments and other transactions.

Mastercard is contributing payment-processing technology and access to its international merchant network, enabling JKB's strategy to expand its digital banking services. Mastercard and JKB are also working with financial technology company FOO for development, testing and deployment of eliWallet.

Mastercard has made several recent moves to grow its Middle East business. The card network formed a partnership with the Rochester Institute of Technology to provide programmers with expertise in artificial intelligence to aid in generative AI projects in the United Arab Emirates, where Mastercard has had operations for more than three decades. Mastercard also formed a partnership with Dubai-based fintech SimpliFi to improve digital payments in Pakistan and other countries in the region. —John Adams

Anne Boden resigns from Starling Bank's board

U.K. challenger bank pioneer Anne Boden has left the board of Starling Bank, a digital financial institution she founded in 2014.

Boden stepped down as Starling's CEO in 2023 and resigned from the board in late June, according to London's Sunday Times, which reports Boden retains a stake of about 5% in Starling.

Last year, Boden formed an artificial intelligence startup called AI by Boden, and reportedly departed Starling's board to pursue an AI venture.

Starling created one of the early digital-focused financial institutions, often referred to as "challenger banks" in the U.K. These startups grew out of the 2008 financial crisis, offering an alternative to traditional branch-heavy banks that younger consumers associated with the Great Recession. Starling was later joined by firms like Monzo and Revolut that had similar models — using digital payments and electronic transfers to enroll consumers in an incrementally larger financial services bundle.

Earlier in her career, Starling held executive positions at Royal Bank of Scotland and ABN Amro, among other roles. —John Adams

Somalia’s new prepaid Visa cards could be a key conduit for aid

Salaam Somali Bank has partnered with Visa to introduce Visa Debit and Visa Prepaid cards in a bid to improve the speed and security of digital payments and support the African nation's large unbanked population.

The debit card is the first product to be connected to the point-of-service systems of Somalia's largest bank, which are used by businesses throughout the county. The card can also be used at ATMs and for e-commerce transactions.

The prepaid cards are expected to be heavily used by the almost 7 million Somalis that require humanitarian assistance, and a means of delivering aid flowing to vulnerable communities, the bank said.

The cards "will enable international NGOs to distribute aid directly to pre-identified beneficiaries," the bank said. Less than 15% of Somalis have bank accounts, according to a UN report.

The Mogadishu-based bank said is has added 40,000 new customers in the past year, and processes 40,000 transactions daily through its mobile banking service.

Salaam Somali Bank is looking to build transaction capacity to meet the demands of the rapidly-growing population and an economy projected by the World Bank to grow by 3.7% in 2024. —Mohammed Omar Ahmed, Bloomberg News