Ant Financial, the digital payments arm of e-commerce giant Alibaba, has bought US-based MoneyGram for $880 million.
MoneyGram has about 350,000 outlets in nearly 200 countries. Ant Financial has more than 630 million users, BBC reported.
The takeover by the Chinese group will need regulatory approval from the US Committee on Foreign Investment.
The inter-agency committee reviews foreign acquisitions of domestic American assets on grounds of national security.
Eric Jing, chief executive at Ant Financial, said the marriage of the two companies will “provide greater access, security and simplicity for people around the world to remit funds, especially in major economies such as the US, China, India, Mexico and the Philippines”.
Ant Financial has a big market share in the online payments industry in China.
The acquisition could help the company extend the lead as well as expand overseas, as competition is growing in China with rival Tencent’s WeChat payment system.
US-listed Moneygram’s shares rose by nearly nine per cent on the news. The takeover has been approved by MoneyGram’s board of directors.
Ant Financial’s shopping spree in the US comes against a backdrop of rising tensions between China and the world’s biggest economy.
US President Donald Trump, before taking office, questioned whether the US should continue its “One China” policy, sparking fury in Beijing.
Trump during his presidential campaign threatened to impose punitive tariffs on Chinese imports.
But Jack Ma, the founder and chairman of Alibaba, held a meeting with Trump in December last year.
While Trump has been critical of China, the President said he had a “great meeting” with Ma, who chose to float Alibaba on the New York Stock Exchange.
The share sale in September 2014 was a record-breaker, as Alibaba raised $25 billion in its initial public offering.
If the MoneyGram deal goes through, it will be Alibaba’s second acquisition in the US.
Last year the e-commerce giant purchased EyeVerify in a $70 million deal.
EyeVerify is a start-up based in Missouri, which uses biometric authentication technology for securing user’s online data and transactions.