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China’s Lianlian Pay sets up U.S. beachhead

The payments company has established a J.V. in New York to expand its reach to new markets and services.

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Lianlian Pay, a Hangzhou-based payments company, has launched a joint venture in the U.S. to seek new businesses and services in facilitating cross-border trade.

The company, Nuna Network, is based in New York and is partly owned by its chief executive, David Messenger.

Lianlian Yintong Electronic Payment Company got its start as a business enabling people to top up their mobile wallets. It then secured a payments license and, later, a forex license from China’s State Administration of Foreign Exchange.

Today it provides software to small- and medium-sized Chinese companies that sell goods on foreign e-commerce sites such as Amazon. To do so it partners with banks in the U.S. and in Europe to help exporters repatriate their proceeds. Messenger, then an executive at American Express, was one such partner.

David Messenger, Nuna Network

He serves as CEO at Nuna, which he says will develop payments and money-transfer solutions to help China connect to the Americas and Europe. “We’re developing software for banks and money-transfer operators in foreign exchange, remittances and supply-chain finance,” he told DigFin. “There’s growth opportunities and we established Nuna Network to find them.

The J.V. is part of a broader international play by Lianlian, which has opened offices or formed joint ventures in Asia, as well as partnered with the U.K.’s Worldpay, to enable that company add Chinese yuan to its settlement and pay-out capabilities.

The company is looking to use its broader footprint to help China-based “e-sellers” enter new markets and generate new business. Nuna’s mission will be to develop digital solutions for payment flows and transactions, starting with U.S.-China trade.

Digitizing trade services
“E-commerce is huge, but offline foreign-exchange trade is even bigger,” Messenger said. To win this business requires doing more than just process payments: it requires integrating it with things like invoices, accounts, and financing, with user data determining credit scores.

Nuna will be helping Lianlian compete against established U.S. payment players such as Western Union, Transferwise and PayPal – and against Chinese giants like Alibaba. But Messenger says Lianlian has developed a niche.

It's big enough not to worry about sizing the addressable market

- David Messenger, Nuna Network

As a pure B2B payments gateway, it has no wallet and doesn’t face consumers, so it’s not competing for the same business as Alipay – or if it is, Lianlian is independent from any sales platform. He says it is a lot cheaper than the likes of a Transferwise (although he concedes that competition against Western Union will be more head to head) and meant to be more user-friendly than a bank’s wire service. (Lianlian and Nuna aren't the only cross-border China payment players.)

“We’ll have a user experience that is good enough to enable rapid adoption, so we can go for scale, quickly.” He says the company should go live with its first customers in Q4 this year, with the aim of ramping up business in 2019. It needs to ensure it earns a high net-promoter score and referral rates to make that happen.

“Lianlian has a long-term perspective,” Messenger said. “This isn’t about short-term revenue.” Instead, Nuna’s mission is to develop other services on top of payments that will be useful to both Chinese e-sellers and banks or remittance players in the U.S. or other markets.

Messenger says the current trade dispute between the U.S. and China is not going to derail cross-border trade, given its sheer size and the degree to which it’s embedded in all economies. Lianlian caters to mid-sized companies in areas such as electronics, apparel and components. “It’s big enough not to worry about sizing the addressable market,” he said.

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China’s Lianlian Pay sets up U.S. beachhead