Fintech is the new label for the computerization and networking of payment systems and financial services. It involves the use of smartphones, mobile payment systems and (sometimes) cryptocurrencies.
The Committee on Foreign Investment in the U.S. is said to be planning to erect a major barrier to trade in digital financial services. For nearly a year, Chinese Internet giant Alibaba has been trying to expand its AliPay mobile payment system beyond China by acquiring the Dallas, Texas-based firm Moneygram International. Alipay was spun off by Alibaba into a separate subsidiary known as Ant Financial.
But this effort was given a rude shock last week when the U.S. Treasury Department’s Committee on Foreign Investment in the United States (CFIUS) blocked the Moneygram deal. CFIUS is an interagency committee chaired by the Treasury Secretary, whose deliberations are shrouded in secrecy. Its legal purpose is to review foreign investments based entirely on national security concerns.
Moneygram, which has only 5% of the global remittance market, is not a Fintech innovator and may have been a declining force in the financial world, but the $1.2 billion deal would have given Alipay access to Moneygram’s 350,000 outlets in 200 countries, greatly expanding its reach. The acquisition would also upgrade Moneygram into the digital-mobile world by linking it to AliPay.
The proposed acquisition was prompted in large part by intense competition between the two Chinese Internet giants, Alibaba and TenCent. Read full post on IGP