- [Announcer] This app,
handled more than $15 trillion of transactions last year.
That's more than Mastercard
and an amount of money that's similar
to the European Union's GDP.
It also has more than 900 million users in China.
People use Alipay pay on buses and taxis,
to pay their utility bills, shop in stores and online,
and even to buy insurance and make investments.
And yet many Americans may have never heard of it.
- And it's huge in China,
the Alipay app is essentially
a financial supermarket that allows you to do
everything on your mobile phone.
- [Announcer] Alipay's parent company, Ant Group,
is getting global attention in 2020.
It's combined IPOs in Hong Kong and Shanghai
could be one of the largest listings ever
as Ant is aiming for a market valuation
in excess of $200 billion.
That means it may sell more than $20 billion in shares
when it goes public.
So what is Ant and how did it become so big?
It all started with Jack Ma,
the flamboyant Chinese businessman,
who's known for his inspirational speeches.
- It's not about the money, it's about the dreams.
- [Announcer] Extravagant performances at company parties.
(singing in foreign language)
And of course, co-founding Alibaba
more than two decades ago,
which has since become a half trillion dollar
online shopping giant.
- Alibaba is like a mix of Amazon, eBay,
and PayPal, also with a dash of Google,
but it handles more business,
its shopping sites than any other company in the world.
- [Announcer] When Alibaba was just starting out,
it created Alipay as an escrow service to hold money
from buyers and release the funds to sellers
after the goods had been sent and received.
This build trust between merchants and buyers
and helped to pave the way
for the eCommerce industry boom in China.
Not that many people in China have credit cards
compared to the US.
With Alipay, most people draw funds directly
from their bank accounts
and make cashless electronic payments
without needing to use credit cards.
- [Stella] In China, you barely see anyone use cash anymore,
whether it's to buy a soda or a pack of cigarettes,
people buy things with QR codes and facial recognition.
- [Announcer] In less than five years,
Alipay has expanded to become a ubiquitous app
that touches other parts of life.
Today Ant Group composes not just Alipay,
but a broader range of financial services,
including micro lending, insurance,
and one of the largest money market funds in the world
called Yu'e Bao.
- [Stella] So it's a really flexible tool
that gives the average Chinese consumers
and small business owners
who have long been ignored by the major banks,
a taste of what it's like to be able to invest
and save money and to get financing to fund operations.
And all of these are done just through
their smartphones almost instantly.
- [Announcer] But the rapid growth of Ant
has drawn scrutiny from banks and regulators
as previously reported by the journal.
Some Chinese banks were earlier concerned
that Ant could take away their deposits
and reduce how much cash people use.
Ant is trying to shed its image
as a disruptor of China's banking sector.
This year, the company dropped the word financial services
from its name in order to rebrand itself
as more of a tech company.
It also partners with many banks
that fund the loans it makes
and has made its money market fund less risky.
- [Stella] Regulators, especially the central bank,
they are very concerned about potential liquidity risk
in one single fund on a Google bound platform.
The problem is if our investors in this firm decide to draw
the money at the same time,
it could cause a huge liquidity risk
and even damage the stability of China's financial system.
- [Announcer] Ant responded quickly to regulators concerns
by imposing caps on how much people could invest
and opening the platform to rival funds.
- While Ant may have been a bit reluctant
to do that to some degree,
it's cooperation with the government really is crucial,
because in China, very few business can succeed
without blessings from the regulators.
- [Announcer] Outside China Ant attempts to expand
have sometimes gotten entangled in politics.
In 2017, Ant tried to buy
US money transfer company MoneyGram,
but the deal was scuttled by US officials
because of national security concerns.
- That was a really big blow to Ant's ambition
to expand to the US,
which is a very large and potentially lucrative market.
- [Announcer] And this time Ant's dual IPO with Alibaba
will bypass New York.
A person familiar with the company said
Ant never intended to go public in the US.
It has its eyes on India and Southeast Asia
where consumers and businesses
are underbanked similar to those in China.
But Ant's plans aren't to launch Alipay in those markets.
- [Stella] Ant never intends to serve consumers
outside of China via Alipay directly.
Their approach is to provide some tag
or operational expertise in some mobile payments startups
in those markets, but they don't really
run this business in-house.
- [Announcer] And since Ant has already captured
the biggest market in the world,
it's been laying the groundwork
to follow the millions of Chinese tourists
who go abroad every year.
The company has increased partnerships with retailers
and restaurants overseas.
While the pandemic has stifled much of global travel
this year, the company is not seeing a slowdown
of online shopping and cashless payments in China.
So Ant will make global headlines
when it hits in Hong Kong and Shanghai,
and may remain a household name only in China.
(dramatic music)