Hurdles in Alibaba’s Path to Swallow MoneyGram
MoneyGram makes a case for the Ant Financial deal
While releasing MoneyGram’s 2Q17 results, the company’s CEO, Alex Holmes, noted, “We are excited about our pending transaction with Ant Financial which will strengthen MoneyGram’s business, increase U.S. jobs, promote financial inclusion by helping more customers access innovative, secure and reliable financial connections, and deliver value to all of our stakeholders.”
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Data security questions
While the idea of increasing US (SPY) jobs may appeal to the Trump administration, some US lawmakers are leery of the idea of surrendering a legacy US money remittance firm to a Chinese company.
Although Ant Financial says that it will keep MoneyGram’s data infrastructure in the US, concerns remain that American citizens’ personal information held by MoneyGram could get into the wrong hands once the deal closes.
A recent move by China’s central bank (MCHI) regarding a clearinghouse for the country’s mobile payments services has raised tensions over a potential national security threat that the MoneyGram–Ant Financial deal could pose to the US.
According to the Financial Times, China’s central bank has created a centralized clearinghouse through which mobile payments will be funneled. Alibaba’s Alipay and Tencent’s Tenpay are China’s top money payment services, controlling more than 90% of the market.
For Alibaba and Ant Financial, the clearinghouse move could make it difficult for them to convince US regulators that they can protect MoneyGram’s data from the Chinese government.