MoneyGram / Alibaba Deal Falls Through Amid Regulator Hit

Remember last January, when we were talking about a big deal between Ant Financial and MoneyGram? The one that would have left the company behind Alipay with a major foothold in the United States? That deal is now officially dead, as Ant Financial has withdrawn the offer and left MoneyGram still an independent operation.

The biggest opposition to the deal, surprisingly enough, came from the Committee on Foreign Investment in the United States (CFIUS), an organization which monitors and reviews attempts by foreign corporate powers to purchase American firms. The CFIUS, reports noted, had several concerns about the deal, which called for several refilings of associated documents. Said refilings did little to assuage CFIUS’ concerns, and so Ant Financial took its $1.2 billion ball and went home.

The move is representative, some note, of the ongoing financial technology (fintech) battle in China. With Alipay a clear leader over WeChat Pay—not to mention UnionPay and the assorted other options in the country—a move like this would have been just the kind of thing Alipay needed to not only hold but further assert its dominance.

However, there’s certainly reason for CFIUS et al to be concerned here; with the Treasury Department actively using the SWIFT interbank system as a means to instill economic policy worldwide, giving a major Chinese payments firm a way to execute an end run, effectively, around the system was probably not a great idea. So CFIUS likely had to shut down the deal just to maintain the value of the SWIFT system.

While this might prompt retaliation in China, China’s impact here might be significantly less. While there’s a lot of value in Chinese consumers, it’s already a trial to get access to the Chinese market for many companies. China can scarcely tighten the screws much farther without declaring outright corporate exile in many cases, and it’s hard to imagine the country eager to get rid of a tax base.

It speaks to the overall complexity of the mobile payments market, especially on the world stage. So while Alipay may have lost a foothold, it’s certainly done wonders on other fronts to make sure its own customers have access no matter where they go. That may have to be enough, at least for now.