How Ant Financial grew larger than Goldman Sachs

Alibaba affiliate Ant Financial is now reportedly worth more than Goldman Sachs, thanks largely to dominance in two trends that have swept China: mobile payments and money market funds for consumers.

Ant Financial announced Friday Beijing time that it raised about $14 billion. The funding values the company at around $150 billion, The Wall Street Journal reported, citing sources. Widely followed Kleiner Perkins partner Mary Meeker also listed a market value of $150 billion for Ant Financial in her internet trends report last week, which ranked it as the ninth-largest internet company in the world.

In contrast, publicly traded Goldman Sachs was worth about $88 billion on Friday.

Ant Financial’s road to a $150 billion valuation has been a quick one. The company grew out of Alipay, the digital payments system that launched in 2004 and contributed significantly to Alibaba’s ability to succeed in e-commerce. When Alibaba went public in 2014, it officially launched Ant Financial through a spin-off.

Today, the company operates some of the key financial services businesses in the massive Chinese market. They include:

Alipay — Similar to how PayPal processes payments for eBay, Alipay handles transactions on Alibaba’s Taobao and Tmall e-commerce platforms. But Alipay has expanded to supporting mobile payments in stores and restaurants, a trend that has taken off in the last few years and essentially eliminated the need for cash in China.

Alipay has 870 million active users, with nearly a third outside China, a company representative said. It’s possible to use the mobile pay app in parts of the U.S. as well.

Yu’e Bao — The operator of the largest money market fund in the world lets consumers invest with as little as one yuan (16 cents) and can offer interest rates of nearly 4 percent or more. It has more than 400 million users and launched two new funds in May. The oldest fund, run by Tianhong Asset Management, launched in 2013 and had 1.7 trillion yuan in assets at the end of March, according to Reuters.

Integration with Alipay often means users of the mobile payments app will store their spare change with Yu’e Bao. It’s name literally means “leftover treasure.”

Zhima Credit — Beijing is trying to develop a social credit system. Ant Financial’s Zhima Credit has created a private credit platform. A spokesperson for the company said the service is not contracted to run, nor is it a private version of the government system. Ant Financial also noted Zhima Credit is an opt-in feature for Alipay users.

Zhima Credit tracks bill payments, spending habits, friends’ scores and other personal information to algorithmically produce an individual’s score. The platform offers perks to users with good numbers, while denying services such as train ticket purchases to those with bad scores.

Ant Financial also operates lending businesses through MyBank and Huabei. The company is widely expected to go public in the next year or so.