WorldFirst, a British money transfer company, shuts US operation to save the takeover by Ant Financial

WorldFirst acts to avoid American regulatory hurdles to its £700m takeover by Ant Financial. Amazon sellers get caught in US-China trade spat as money transfer service abruptly closes.

A British money transfer company has abruptly closed its US operation in an attempt to avoid having its planned £700m takeover by China’s Ant Financial derailed by American regulators, according to Financial Times.

WorldFirst has been in talks with Ant Financial since late last year in a deal that would mark the biggest expansion into western markets by China’s leading mobile payments provider.

In a message to customers this week, WorldFirst said its shareholders “have taken the decision to discontinue with the US operations” and will stop offering all services after February 20.

The move was designed to avoid the UK company’s takeover becoming the second deal by Ant Financial in as many years to be blocked by American regulators over national security concerns, according to two people briefed on its decision.

Customers were told that World First USA will be rebranded as Omega and will “subsequently operate independently of World First Group”.

A rival fintech executive familiar with the move said it was “pretty extreme to shut the whole business”, but it appeared to be the “only way to avoid the US regulator blocking the [Ant Financial] deal”.

The decision comes almost exactly a year after Ant Financial, the digital payments affiliate of Chinese ecommerce giant Alibaba, was forced to abandon a proposed $1.2bn proposal to buy MoneyGram, a US money transfer business. Ant Financial was forced to pay a $30m termination fee after it failed to win support from the Committee on Foreign Investment in the US (Cfius). Politicians had raised concerns about handing over the financial data of US citizens to a company partly owned by Chinese government funds.

Relations between the US and China have worsened further in the subsequent 12 months, and a law passed in August will give the Cfius sweeping review powers over even small minority stake purchases in American companies.

WorldFirst opened a US subsidiary in 2011 and launched a major new product in the country last October. In accounts submitted to Companies House the same month, the company said it was looking for more international expansion opportunities.

Even after the closure of its US business, an acquisition of WorldFirst would still mark Ant Financial’s first big push into the European market, as well as bringing new business in countries including Japan, India and Canada.

For Ant, the expected acquisition of WorldFirst supports the company’s global push and expansion beyond mobile and online payments service Alipay. Ant CEO Eric Jing told CNBC in November that his company was investing in technology services for banks so that it’s not limited to payments.

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It’s the latest example of the collateral damage that’s resulting from the escalating U.S.-China spat, which centers on a trade imbalance as well as alleged intellectual property theft by Chinese firms.

The two governments have set a deadline of early March to come to an agreement on a trade deal. In the meantime, the Trump administration has been blocking big deals, such as Chinese companies taking significant stakes in U.S. businesses and from buying certain U.S. technology components, claiming such transactions would pose a national security threat.

WorldFirst is one of the main services used by Amazon sellers to handle transactions across the world so merchants can get paid in many different currencies on a single platform. An Amazon sellers group sent an email to members on Friday suggesting that WorldFirst customers switch to rival service Payoneer, which “can help if you are selling in the US, U2K, Europe, Canada, Japan, China, Australia, and Mexico,” the message said, according to CNBC.

WorldFirst said service for customers outside the U.S. and Canada will be unaffected by the change. Clients in those two countries were told that between Jan. 31 and Feb. 7, they could only make outbound transfers to existing beneficiaries. After Feb. 7, any balances would be returned to the sender, and after Feb. 20, the company would have no live phone or email service.

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