V-Key, a security software maker for mobile apps, has raised $12 million from Alibaba Group affiliate Ant Financial Services and IPV Capital, a venture capital firm based in China. The Series B round means that Ant Financial now has a minority stake in V-Key, which is based in Redwood City, California.
V-Key’s V-OS technology is supposed to provide a user-friendly way to protect data including identity verification and e-commerce transactions. The company, which also has offices in Singapore, says that V-OS is already deployed on “millions” of devices throughout the world.”
A close relationship with V-Key will come in handy for Ant Financial because it operates several mobile and online financial services, including Alipay (China’s largest third-party online payment platform, which handles 80 million transactions a day, including 45 million through mobile devices); Alipay Wallet, online investment fund Yu’e Bao; Zhao Cai Ba, a loans marketplace for small businesses; Ant Credit; and MYbank, which is currently under formation. Ant Financial hopes to expand several of these businesses into international markets, as well as within China.
In the past, Alipay has acknowledged that since the mobile payment industry is still relatively young, many users worry about the safety of trusting bank accounts, credit cards, and other financial info to apps and online wallets. In April, Alipay announced that it had set up a 40 million RMB ($6.5 million) fund to build partnerships with banks, e-commerce companies, and security software makers to strengthen security for its products.
As noted on Alibaba Group’s official blog, Alipay wants to grow its business beyond its online payments platform with a new vertical called ePass, which allows Chinese consumers to purchase goods directly from international e-commerce sites using the Alipay Wallet mobile shopping app. Cross-border shopping in China is a rapidly growing market and it makes sense why Alibaba Group would want to tap into it. 14 million Chinese consumers currently make up nearly 78 percent of the total amount of people who make overseas purchases, and spent $16.7 billion in 2013, almost half the value of all cross border online sales, according to Nielsen.
In a statement, Jason Zhu, head of Alipay’s investment team said: “V-Key’s all-in-one virtual security element technology is in line with Alipay’s commitment to creating a safer, more convenient global transaction environment. With global mobile payment transactions on the rise, mobile identity and data protection on numerous types of mobile devices and operating systems globally remains paramount, in addition to their ease-of-use and convenience.”
In addition to its link-up with Ant Financial and Alibaba Group, capital from the Series B will also allow V-Key to expand globally and develop their technology.