The deal aims to “provide greater access, security and simplicity for people around the world”.
Online payment services provider Ant Financial, formerly known as Alipay, is set to buy MoneyGram for $880m.
MoneyGram, a US money transfer firm, has an estimated 350,000 outlets across almost 200 countries and will look to increase Ant Financial’s 630 million user-base.
Eric Jing, chief executive at Ant Financial, said that the deal would “provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the United States, China, India, Mexico and the Philippines”.
Ant Financial’s parent company Alibaba looks to be eyeing the US market, having previously acquired EyeVerify in a $70m deal. As a Chinese company, Alibaba’s deal with MoneyGram will send a positive message regarding the future of the business relationship between China and the US.
Following news of the acquisition, MoneyGram’s shares rose by 9% at close, with the takeover having been approved by its board of directors. The action will still require regulatory approval from the US Committee on Foreign Investment.
Overshadowing the deal, US-China relations have been growing colder since suggestions of discontinuing the “One China” policy were raised by President Donald Trump, then president-elect.
Despite this, President Trump has said that he had a “great meeting” with Mr Ma, Founder and Executive Chairman of Alibaba Group, who chose to enter Alibaba on to the New York Stock Exchange. Alibaba raised $25bn in its initial public offering.
Alibaba recently achieved a 54 percent rise in third-quarter revenue, finding momentum in its latest focus on cloud, artificial intelligence and logistics, while downplaying the function of online retail in the future. Executives including Chairman Jack Ma have identified Alibaba as a data company.
A further move has been made by the company to digitize offline shopping, as a $2.6bn bid has been submitted to privatise department store operator Intime Retail Group.