Chinese e-commerce giant Alibaba is teaming up with internet company Mail.ru Group to promote digital payment services in Russia, it said on Wednesday.
Why it matters: The new JV, which follows a previously agreed upon e-commerce partnership, is a part of Alibaba’s strategy to expand its footprint in the Russian market. The partnerships could help open the China market to Russian merchants and in turn help promote commercial activities in two countries.
“The new joint venture for payments will work to accelerate the development of Russia’s digital economy by upgrading the country’s digital payment services.”
Details: Alibaba’s Alipay has agreed to set up a joint venture (JV) with Mail.ru and three Russian partners including international holding company USM, mobile operator MegaFon, and sovereign wealth fund Russian Direct Investment Fund (RDIF).
- The new payment JV is a first for Ant Financial, Alibaba’s fintech affiliate that runs Alipay, outside of Asia. The deal will focus on upgrading digital payment services for Russian users. The fintech firm has formed JVs with local partners in neighboring regions to launch digital payment services including in Hong Kong, Indonesia, and Malaysia.
- Mail.ru said its payment service Money.Mail.ru and payment platform of its social networking service VK Pay would also be part of the payment JV, which Mail.Ru will be the largest shareholder with a 40% stake.
- Ru, along with RDIF and Megafon, recently completed an e-commerce deal with Alibaba with the formation of AliExpress Russia JV, the company said on the same day in a separate announcement. The partnership will enable consumers in the country to use Alibaba’s AliExpress to purchase products online. The JV would also help small and mid-sized Russian businesses to gain access to China and the other Asian markets, the company said.
Context: Alipay has more than a billion users worldwide. It has managed to expand its global footprint through its partnerships with local partners in Asia.
- The payment service provider also has operations in Europe and North America, which focus more on serving an increasing number of Chinese consumers and tourists in those areas.
- Alibaba launched AliExpress in Russia in 2010, however, it has been speeding up its expansion in the country over the past year to tap into Russia’s rapidly growing e-commerce market.
- Russia’s sovereign wealth fund RDIF, which is a shareholder in both digital payment and e-commerce JVs, has played a significant role in Russia and China’s developing ties.