The Dutch payment service provider Multisafepay is likely to end up in Chinese hands. ANT Group, the company behind Alipay, a subsidiary of webshop Alibaba and the largest provider of contactless payments worldwide, has according to Reuters news agency approximately $200 million for the shares of the Dutch founder and sole shareholder.
With the purchase, the Chinese company would become a player in European payment transactions, where payments can already be made with Alipay through third parties. The takeover requires approval from supervisory authority De Nederlandsche Bank.
ANT Group and Multisafepay refuse to answer questions about the possible acquisition. The Reuters reporting of January 5 has not since been denied and is believed to be true by insiders.
Alipay is the Chinese version of Apple Pay and PayPal. It is a formidable competitor to those American companies. And also from Visa and Mastercard, for example, which still process a large proportion of payments in Europe.
Multisafepay – which has an office in both the Netherlands and Spain – processes online payments for web shops, so that they do not have to be able to work with all different payment methods. It is now fully owned by founder Olaf Geurs (54), who started the company in 1999.
Alipay is one of the thirty payment methods that Multisafepay now offers. The Dutch company helps to make payments with Alipay possible in the Netherlands. This is currently mainly interesting for Chinese tourists who want to spend money here (you can pay with it in the Bijenkorf, for example) or European web shops that want to sell in China. Until a few months ago, Alipay's foreign strategy was mainly focused on serving that group. That has recently changed, says analyst Antonia Hmaidi, from the Merics research agency in Berlin, which specializes in China. “Alibaba [het moederbedrijf van Alipay] is trying to broaden its revenue base and is looking outside China. This is partly due to the attitude of the Chinese regulator, which makes further expansion there difficult.”
National security
The takeover requires a declaration of no objection from De Nederlandsche Bank and possibly also from the Ministry of Economic Affairs. Both say they are not allowed to make any announcements about pending applications. Nor is it whether there is a procedure at all. This will only be announced afterwards in the event of approval. The Minister of Economic Affairs and Justice and Security may impose retroactive measures or have investments reversed, for example, if national security is at stake.
Multisafepay serves approximately 10 percent of online stores in the Netherlands. After the rapid increase in online sales during Covid, growth in the online payments market is now slowing. Small parties have to compete with global players such as Adyen and Stripe. Analysts therefore believe it is expected that a medium-sized player such as Multisafepay will be acquired before the market deteriorates. They think it won't be Alipay's last acquisition.
With “the power and strength of a Chinese multinational behind it,” Multisafepay could become a major Chinese player in European payment transactions, says VVD MEP Bart Groothuis. And we shouldn't want that, he warns. Groothuis insists that the Dutch government intervene in the purchase and take the interests of the entire EU into account. “The takeover of one company gives them one foothold throughout the EU. They may then provide financial services in all European language areas. I think that European institutions should take a look.” The MEP points out that the European Commission made a proposal on January 24 this year has sent to the European Parliament to tighten the screening for foreign takeovers and investments. According to Groothuis, this possible takeover certainly falls under this.
According to him, it would be naive to only look at the current size of Multisafepay. “In this branch it is increasingly about data. Financial transaction data is a powerful weapon. That should not fall into the hands of high-risk countries.”
He fears a scenario in which the Chinese state, to satisfy its data hunger, uses the data that Chinese companies collect. “Then they can find out, for example, who ordered a book critical of President Xi or about the slavery of the Uyghurs.”
Although less alarmed, analyst Antonia Hmaidi and Frans-Paul van der Putten, China expert from the Clingendael institute, also think that the Dutch government should take a critical look and make a strategic assessment with a view to national security. It is wise to think in scenarios, says Hmaidi. “Would it be a problem for the Dutch economy if Alipay were ordered by the Chinese government to turn off all their payment services?”
Van der Putten also believes that it should be taken into account that Alipay is quickly becoming a dominant player in the Dutch and possibly also European market via Multisafepay. He calls the possible takeover an interesting test of the Vifo Act. This came into effect on June 1 last year and is intended to assess whether acquisitions and investments can pose a risk to national security. Since June 1, there have been no takeovers by Chinese companies.
A similar law has existed in America for some time. There, concerns about China's rapid growth as an economic competitor and global power are more prominent. In 2018, the takeover of money sending company Moneygram by the ANT Group was therefore blocked.
European alternative
Alipay is a formidable competitor for American payment systems such as Visa and Mastercard. The EU aims to become less dependent on American companies in particular for payment transactions. That doesn't work very well yet. With a view to this pursuit of more strategic autonomy, work is being done on the European digital euro. And a number of European banks, including ING, are trying to make the Dutch iDeal a European alternative to card payments.
Doomsday scenarios do not have to come true, Hmaidi emphasizes, and Europe must make its own decision, without being prompted by the US. But it would also be foolish, says Hmaidi, not to take it into account at all. Conditions could therefore be attached to the approval of a takeover. Such as that the transaction data of European users must be kept in Europe so that the Chinese government cannot claim them. “This is an opportunity for the EU to show that it values transparency, openness and laws and regulations. Even if you are a Chinese company.”
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