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Business Dissection of Ant Group: One-Seventh of Global Population Uses Alipay [1/2]
COVID-19 and China
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Ant Group focuses its business on digital payments and financial services, which together make up over 99% of revenue. 

The client base of the company includes almost all entities in society, including individual customers, merchants, companies and financial institutions. 

Ant Group was established in 2004 when the e-commerce industry development was just getting started planetwide. The company launched the payment platform Alipay, which was developed to bridge the gap between customers and merchants. It is now the largest digital payment provider and the leading fintech platform in China, by total transaction volume. Helping to digitalize people's lives, Alipay is a platform that supports their most fundamental needs through an array of technological tools. Through Alipay, Ant Group provides:

►… consumers with a comprehensive menu, which includes financial services (digital payments, consumption loans, wealth management and insurance, among others) and daily life services, such as food delivery, traveling, and entertainment. 

►…merchants with payments services and financial services, such as credit lending to small businesses, the wealth management products. The mini apps embedded in the Alipay platform help merchants to reach more customers and link their offline and online services.

►…companies with intelligent business solutions on asset management, decision making and technology infrastructure construction. 

►…financial institutions (FIs) with technical support. They can reach more customers and even cooperate with each other through the Alipay platform, which supports both FIs and customers.

By the end of the first half of 2020, the operation results of Ant Group showed that Alipay is not only a payment tool but an entire infrastructure layer embedded in people's daily lives now. The synergies of combining the payments and financial services on one platform are showing up.  

Digital Payments 

Ant Group provides payment services on commercial transactions, financial transactions and personal transactions. Through the Alipay app, payments can be processed among individuals and merchants, as well as financial institutions, and the service fees are charged from every payment. What is more, Ant Group also generates revenue by helping the merchants with the development of their unique mini programs. The app has gathered over 100 million users and 8,000 merchants globally. In the twelve months through the end of June 2020, it completed over CNY 118 trillion in transactions.

Transaction services

Transactions can be made through four tools that are divided by five types of accounts, as shown below. The payment scenarios include commercial, credit payment, transfers between individuals and other financial transactions. The independent-developed technologies support the platform to operate under large-scale and frequent transactions with the payment loss rate lower than 0.6 of billions, which ranked first in the global payment providers with a transaction scale larger than USD 500 billion. 

Merchant services

At the end of the first half of 2020, there were over 2 million mini programs on the Alipay platform. These give merchants access to techniques for attracting new customers and offering services, and binds the two sides closer. Through Alipay, the merchants can manage their customers and therefore develop strategies to maintain activity. Customers can easily order food on Alipay in advance and merchants can offer discount coupons through mini programs. What is more, the credit rating product, Zhima Credit (Chinese: 芝麻信用), which is similar to the FICO score in the US, enables the merchants such as hotels and car renting companies to access to users' credit performances and therefore waive the deposit in advance if applicable. 

Cross-border services

Though the main digital payment businesses are centering in mainland China, Ant Group is also promoting linkages between merchants and customers, banks and small to medium businesses (SMBs) in over 200 countries. 

The services are provided through the cooperation between Ant Group and the local acquirer, banks, digital wallets and Independent Software Vendors (ISV). In the twelve months through the end of June 2020, the company had dealt with over CNY 622 billion transactions outside of China. Customers can easily purchase products both online and offline and exchange currency in other regions through Alipay. Also, Ant Group offers payment solutions to global merchants, such as AliExpress, a cross-border B2C online shopping platform, and Lazada, a large e-commerce platform in Southeast Asia. 

(This is the first part of the series article. In the next part, we will discuss the digital financial service business of Ant Group.)

Editor: Luke Sheehan

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