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China's XTransfer to expand from payments into wealth management, lending

·2 min read

SHANGHAI, Aug 1 (Reuters) - XTransfer, which facilitates cross-border payments for small businesses in China, said it is moving into wealth management and lending for clients underserved by traditional banking.

The fintech firm's founder and CEO Bill Deng said that XTransfer - which competes in China with PayPal and PingPong - is starting to offer short-term investment products to small Chinese exporters with cash temporarily held in their accounts.

Such exporters get paid by overseas buyers but do not have to immediately pay suppliers, allowing them to generate returns with this spare money, Deng, who previously worked at Ant Group, Alibaba's fintech affiliate, told Reuters.

Five-year-old XTransfer also plans to use data generated through cross-border transactions to begin lending services for small- and medium-sized enterprises (SMEs) later this year in partnership with banks, Deng said.

Without adequate data, SMEs are shunned by Chinese lenders.

Ant initially also began by offering payment services, before expanding into other financial businesses.

XTransfer, which counts China Merchants Venture and Gaorong Capital as investors, has avoided going head to head with Ant by focusing on cross-border payments and small businesses.

"We want to be a cross-border version of Alipay linking buyers and sellers," Deng said in reference to Ant's hugely popular payments app.

XTransfer's expansion comes as Beijing has eased a crackdown on the tech sector, and encouraged support to SMEs in an economy hit by the COVID-19 pandemic.

"The central government and the People's Bank of China are hoping that financial services can be expanded to support SMEs," Deng said, adding XTransfer will also help small exporters become more resilient through digital transformation.

Overseas payments made to China's small exporters grew 15.3% from a year ago in the first half, despite severe COVID outbreaks in the second quarter, reflecting the resilience of Chinese SMEs, XTransfer said in a recent report. (Reporting by Shanghai Newsroom; Editing by Alexander Smith)