Tencent , Alibaba chase remittances in battle for Southeast Asia
JAKARTA/HONG KONG: For Chinese tech giants Alibaba and Tencent, Southeast Asian domestic helpers in Hong Kong may prove key to their global ambitions in financial services.
Both companies recently launched money-transfer services that allow Hong Kong-based workers from Indonesia and the Philippines to send money home cheaply and easily. The moves are a first step in going after a global remittance business that moves more than $600 billion around the world annually. But the initiatives are also part of the firms’ broader efforts to take their wildly successful Wechat Pay and Alipay mobile payment system overseas.
Southeast Asia, with a growing population of 600 million people who mostly lack bank accounts, is a strategic battleground for Asian tech behemoths and their US rivals.
Alibaba’s financial affiliate Ant Financial called its Hong Kong remittance initiative “a starting point and significant step in accelerating our pace to promote financial inclusion globally.”
Tencent’s Wechat Pay, which is ubiquitous in China but has struggled to gain traction abroad outside of Chinese tourist destinations, is more circumspect about the goals for its Hong Kong We Remit service, although a spokesman said it was open to “all possibilities.”
Sending money across borders, however, is harder than it looks. That helps explain why both companies are working with a Hong Kong-based financial technology start-up, EMQ, which has regulatory approvals and bank partnerships in place across Southeast Asia and elsewhere.
“We are the pipes and distribution for Tencent,” said EMQ CEO Max Liu. He declined to comment on any relationship with Ant Financial, but three sources with knowledge of the matter said that Ant Financial is developing its own partnership with EMQ as part of a suite of new crossborder payment efforts. Ant Financial declined to comment.
The “pipes” are only part of the challenge. Reuters interviewed six Filipino and Indonesian domestic workers in Hong Kong who said it would take time to get their families to trust receiving remittances via their mobile phones.
Indeed, We Remit doesn’t currently link up to mobile phone wallets. Instead, recipients pick up funds at banks or pawnshops, just as they’ve traditionally done with services from market leaders Moneygram and Western Union.
For the senders, the new services can be a revelation. For years, the only way Filipino maid Rochelle Bumanglag could send money home was by spending her off days on Sunday waiting hours at banks and remittances shops in downtown Hong Kong.
“When I go to a bank, it’s a lot of queuing and a lot of hassle. Wechat, they always give us a good rate. It’s very convenient, very fast. I go to 7-11 and put money in my account,” the 42-year old said.
Another big attraction: neither Wechat nor Alipay are charging fees, at least for now.
“The Wechat rate is 6.80 peso to the HKD (Hong Kong dollar), whereas the bank’s rate is 6.79 pesos plus a HK$25 ($3.20) cable charge. It’s a big difference for us,” said Bumanglag, who sends about 10,000 pesos, or about HK$1,470, a month home.
Eventually, those new Wechat and Alipay users might be persuaded to use other services too, the companies hope.
Filipinos and Indonesian make up most of Hong Kong’s 370,000 domestic workers, according to government data. The two countries are among the world’s top recipients of money transfers: The Philippines received $32.8 billion in remittances in 2017, while Indonesia had $9 billion, according to the World Bank. Over $16.9 billion in remittances flew through Hong Kong the same year.
Southeast Asia, with a growing population of 600 million people who mostly lack bank accounts, is a strategic battleground for Asian tech behemoths and their US rivals