Ant Financial and Tencent Holdings Ltd. have won approval to operate digital wallets for customers in Hong Kong, a significant step in the two Chinese internet giants’ overseas expansion.
The license helps the companies bounce back from an earlier setback to their growing payments businesses. China’s central bank in July banned people who didn’t own a mainland bank card from storing money in Ant Financial’s Alipay or Tencent’s WeChat Pay accounts, depriving them of a large potential customer base of overseas Chinese. But the Hong Kong Monetary Authority has now granted approval for users in the city to store money in the local version of their online wallets.
Zhejiang Ant Small & Micro Financial Services Group, which is trying to expand globally from India to Germany, is using Hong Kong as a test lab before building an overseas presence, Sabrina Peng, vice president of international business for for the company known as Ant Financial. Alipay, which currently has more than 1 million users in the city, has to date convinced more than 6,000 merchants from Ocean Park to Starbucks to accept Alipay.
“Hong Kong is extremely important for us,” said Peng. “With this license, it will be much easier for us to service Hong Kong residents in areas of payment and lifestyle.”
Credit card penetration is high in Hong Kong but people are wary of using plastic while shopping online because of safety concerns, Peng said. Apart from cards, Hong Kong shoppers previously could buy pre-paid Alipay cards from convenience stores, convert their cash into yuan, then deposit in Chinese online accounts — a burdensome process.
The HKMA, the city’s de facto central bank, has granted five stored-value facilities licences in total, allowing cards or online accounts to be loaded directly in the local currency. HKT Payment, Money Data and TNG (Asia) also won licences, the authority said in a statement.
Ant Financial is controlled by Alibaba Group Holding Ltd. co-founder Jack Ma. Its Alipay service is accepted by more than 70,000 off-line retailers in over 70 countries and regions, the company said in an e-mailed statement in July.
© 2016 Bloomberg L.P