After the disappointment of US regulators blocking its purchase of MoneyGram, Ant Financial has taken a step towards dramatically lowering the cost of remitting money overseas in a move that will, in its initial stages, help the hundreds of thousands of Filipinos working in Hong Kong, who collectively remit about HK$4.4 billion ($561 million) annually to family and friends back home.
By using blockchain technology, Ant Financial aims to eventually cut the cost of remittances to near zero, according to Alibaba co-founder Jack Ma Yun, who said he wanted to find a way to help people.
“This comes from a promise I made a long time ago when Alipay was just launched,” said Ma. “I have Filipino friends who asked me when they could use Alipay to send money home because it was too expensive through banks, which charge too much.”
The blockchain money remittance service announced Monday for its AlipayHK wallet is the first of its kind globally, according to Ant Financial. It is currently available only for transfers between Hong Kong and the Philippines, which is the world’s third-largest remittance market, with inflows of $33 billion in 2017, according to Standard Chartered, which will act as the settlement bank for both AlipayHK and GCash for the blockchain transactions.
“Hong Kong is an international financial centre in Asia, and it is most fitting that Ant Financial has chosen to kick off this pilot project right here,” said the city’s financial secretary Paul Chan Mo-po. “We take pride in Hong Kong’s robust and effective financial regulatory regime that is in line with international standards. Our financial regulators are doing their part to facilitate and foster innovations in the industry with their dedicated liaison platforms and sandboxes … allowing financial service providers to conduct pilot trials of fintech solutions in confined environments.”
Hong Kong’s banks and remittance outlets charge about HKD$18, and may impose other costs such as commissions or currency conversion fees on every transfer.
Ma, speaking at the launch event, said he wants to make it possible for people to remit even 1 cent at almost no cost, compared with the higher fees charged by traditional remittance services like MoneyGram, which Ant tried to buy last year.
“At the time we wanted to buy MoneyGram and overhaul it to help people all over the world solve this issue. Due to reasons from the US our deal with MoneyGram did not succeed, so I said, ‘Let’s make one better [than MoneyGram]’ that uses the most advanced technology,” Ma said.