Alipay’s Ant becomes No.2 shareholder of S. Korea’s Toss Payments

Ant Group Co., the operator of China’s biggest mobile payment platform Alipay, has become the second-largest stakeholder of Toss Payments, the payment gateway (PG) subsidiary of Viva Republica Inc.’s financial super app Toss, with about a 40% stake.

The deal is expected to speed up the South Korean fintech unicorn’s advance into overseas markets, which could become a fresh growth driver at a time when the Korean mobile payment market is rapidly saturating.    

According to the investment banking industry on Monday, Ant Group has acquired a 72% stake in Blitz Fast Inc., a special purpose company equally owned by Viva Republica and the financial investors of Toss Payments — LB Private Equity Inc. and Premier Partners LLC — for 100 billion won ($75.5 million).

With the acquisition, Ant Group has acquired a 36% stake in Toss Payments, which was held by the financial investors that chipped in Toss’ acquisition of the PG service from Korean mobile carrier LG Uplus Corp. in 2020.

The Chinese financial super app operator also took part in Toss Payments’ new share sale worth tens of billions of won, which has allowed the former to hold the second-largest stake of about 40% in the latter. 

STRATEGIC PARTNER FOR A GLOBAL PUSH

With the deal, Toss Payments now has Alipay — the world’s largest mobile payment service — as its strategic partner, which will help ramp up the Korean PG service’s global expansion, according to the startup industry.

“The deal has not only eased the [Korean] company’s financial burden but also opened a new chapter for its business expansion,” said an official in the Korean startup sector.

Toss Payments provides PG services that enable merchants, both online and offline, to accept digital payments including credit cards and direct payments.

It has been seeking to venture into the cross-border payment market for higher margins given that the local PG and quick mobile payment markets are crowded with players large and small.

Alipay boasts 1.3 billion users in China and Southeast Asia and 80 million member merchants. This means that the Korean PG company will not need to sign separate membership contracts with offshore merchants if it partners with Alipay.

Once Alipay and Toss Payments allow the sharing of each other’s payment infrastructure, foreign shoppers will be able to use Alipay to pay for their purchases at about 100,000 online shopping malls in Korea.

This is also expected to allow Korean shoppers to pay for their purchases at foreign e-commerce sites using the Toss payment app.

A WIN-WIN 

Their partnership is expected to give a boost to Ant Group’s push to expand its presence in Korea.

It has forged partnerships with Zero Pay, a money transfer service introduced by the Seoul metropolitan government, and Korean internet giant Naver Corp.’s payment service this year.

Alipay is already the second-largest stakeholder of the country’s other major digital payment app Kakao Pay, run by Kakao Corp., operator of Korea’s leading messenger app KakaoTalk, with a 34.7% stake.

Some industry observers raised concerns that the Alipay-Toss alliance would dent the Chinese payment service’s partnership with Kakao Pay.

In response, Kakao Pay said its coalition with Ant Group “remains intact," and that they are seeking to expand their merchant membership base for cross-border and regional payment services.

NO. 2 STAKEHOLDER IN TOSS AND KAKAO PAY

Following the deal, two Ant Group officials joined Toss Payments’ board of directors on Sept. 12, replacing the empty seats left by the departure of officials from the previous financial investors.

Of the two directors appointed by Ant Group, Danny Chung, the general manager of Ant Group Korea, Australia and New Zealand, joined Toss Payments after leaving Kakao Pay’s board, which he first joined in 2017.   

The other new director is Peng Yang, the president of Ant Group’s International Business Group.

Toss Payments confirmed that the two new board directors from Ant Group have joined it but said there is no detailed plan for the two payment apps’ partnership.

Viva Republica joined the unicorn club with its valuation of $1.2 billion in 2018. Its mobile payment app Toss has become a finance super app with wide-ranging features such as banking, P2P lending, mobile stock trading and investing, insurance and credit scoring service.

Chinese e-commerce and internet giant Alibaba Group Holding Ltd. owns about a 33% stake in Alipay operator Ant Group.

Write to Nan-Sae Bin at binthere@hankyung.com
Sookyung Seo edited this article.