The deal will help turn Kakao’s fintech services into a fully functional subsidiary company
Jack Ma’s fintech company Ant Financial announced today it is investing US$200 million into the South Korean internet platform Kakao to help it launch its mobile financial subsidiary (tentatively to be called Kakao Pay Corp.).
The investment comes as part of a larger strategic partnership between the two firms in which Ant will connect its 450 million users to Kakao Pay. Kakao has over 48 million users on its various platforms.
“Given Kakao’s leading mobile platform offering and vast customer base, we believe we can bring Ant Financial’s broad experience in digital payments and technology-driven financial services to offer exciting and innovative products to South Korean customers,” said Douglas Feagin, President of Ant Financial International in a statement.
Chinese users will be able to use Alipay in South Korea (following Ant’s pattern of setting up partnerships with foreign companies to target Chinese tourists).
Kakao Pay users will see their services diversify as the South Korean company assimilates the Ant Financial investment and technology. Kakao Pay already offered bill payment, remittance and membership management services.
Kakao will also increase its merchant numbers by on boarding Ant’s 34,000 merchants and offering their own clients Ant’s much larger customer base.
In the future, the two companies hope to launch a payment product that will allow South Koreans to seamlessly shop on Alibaba’s various e-commerce marketplaces.
Turning a service into a company
Kakao is a leading internet platform in South Korea and is best known for its Kakao Talk service. The company also has products in the game, news and cartoon verticals, among others.
Kakao Pay is not a new product and has already accumulated 14 million users. The change is the decision to spin-off the fintech division into a full-blown subsidiary company.
One of Kakao’s visions is ‘connect everything’ and in 2017 a major part of that ethos is to have an active and integrated payment network.
Young-Joon Ryu, who led Kakao’s fintech division, will now be in charge of the new company.
Also Read: Ant Financial is raising US$3B in debt to fund M&A deals: Bloomberg
While its 450 million users would be a dream for any tech company, Ant Financial’s main product, Alipay, faces significant domestic competition from Tencent’s WeChat Pay.
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