YANGON -- The Chinese company behind the Alipay smartphone payment system said Monday that it will take a stake in Digital Money Myanmar to cater to the underbanked communities in the developing Southeast Asian nation.
Ant Financial Services Group, which is under the umbrella of Chinese e-commerce giant Alibaba Group Holding, will bring its Alipay technologies and business expertise to Myanmar, where the digital payment market is expected to grow.
"Myanmar's population is still massively underserved by formal banking institutions with only a quarter of people having a bank account," said Melvyn Pun, CEO of Yoma Strategic Holdings. "Ant Group brings a wealth of expertise in mobile payment and financial services."
Ant Financial will invest $73.5 million in Digital Money Myanmar, a joint venture between local conglomerate Yoma Group and major Norwegian mobile carrier Telenor Group. Although Ant Financial's stake after acquiring new shares has not been disclosed, a source said that the "three parties will have similar shareholdings."
Digital Money Myanmar launched Wave Money in 2016, becoming a pioneer in the field. To use the service, a person who wants to send money brings cash and the phone number of the recipient to a participating store. Recipients receive notifications on their phones and go to a nearby participating store to receive the money.
Wave Money succeeded in capturing demand of laborers working in cities to send money back home to rural areas, with transfer volume reaching 6.4 trillion kyat ($4.3 billion) in 2019.
Through the partnership, Digital Money Myanmar hopes to grow Wave Money from a simple remittance service to a widely used digital payment platform.
Few people currently use Wave Money's smartphone app to make payments from their accounts using QR Codes or to pay utility bills. Digital Money Myanmar will tap Ant Financial's know-how to increase usage by introducing new services. Alipay offers a wide range of services, such as using consumers' purchase history to determine credit scores.
About 10 companies now provide smartphone payment services in Myanmar. These Wave Money competitors include KBZPay, backed by Myanmar's banking leader KBZ Bank, and MPT Money, offered by the nation's largest mobile carrier, the state-run MPT.
The Myanmar government said it will promote the use of available mobile payment services under its COVID-19 economic relief plan announced late last month. It is preparing to use mobile payments to distribute funds to households hit hard by the coronavirus pandemic.
"The COVID-19 situation is accelerating the trend toward a cashless society and drives the growth of e-commerce," said Pun.