Amazon sellers get caught in US-China trade spat as money transfer service abruptly closes

Key Points
  • WorldFirst is used by Amazon sellers who do business across the globe and transact in many currencies.
  • The parent company is based in the U.K. and is reportedly in advanced talks to be acquired by China's Ant Financial.
  • U.S. customers weren't told why the service was suddenly shuttered this week.
Eric Jing, CEO of Ant Financial
Bobby Yip | Reuters

Many big Amazon sellers received a notice this week from a company they rely on for international money transfers. The message from WorldFirst, which is based in London, was alarming: its U.S. business was closing immediately.

"We are writing to share some news that affects you as a US-based customer of WorldFirst," the email said. "The WorldFirst shareholders have taken the decision to discontinue with the US operations. As such, we will no longer be able to offer our products and services to you."

WorldFirst didn't offer an explanation for the abrupt decision, and one Amazon seller, who asked not to be named, told CNBC "that was quite a shock." The company said its U.S. business was being rebranded as Omega, which would operate independently from WorldFirst, and that no new transactions could be made after Wednesday, Jan. 30.

Sellers and competitors who spoke with CNBC speculated that the shutdown was directly related to a pending acquisition of the parent company by Chinese fin-tech giant Ant Financial.

Ant, an Alibaba affiliate and parent of Alipay, has reportedly been in advanced talks since late December to buy WorldFirst for about $700 million. Ant has been unable to crack the U.S. market because of opposition from the Trump administration. Last year, the Committee on Foreign Investment in the United States (CFIUS) quashed Ant's attempt to buy MoneyGram for $1.2 billion because of national security concerns.

Ant Financial and MoneyGram merger cancelled

On Friday, the Financial Times reported that WorldFirst "abruptly closed" its U.S. business to avoid having the acquisition "derailed by American regulators." The paper cited two people briefed on the decision. WorldFirst's U.S. operation was based in Austin, Texas, and the company also had employees in San Francisco. One person told the FT that the move would result in "heavy job losses" among the U.S. staff.

WorldFirst didn't respond to requests for comment.

It's the latest example of the collateral damage that's resulting from the escalating U.S.-China spat, which centers on a trade imbalance as well as alleged intellectual property theft by Chinese firms. The two governments have set a deadline of early March to come to an agreement on a trade deal. In the meantime, the Trump administration has been blocking big deals, such as Chinese companies taking significant stakes in U.S. businesses and from buying certain U.S. technology components, claiming such transactions would pose a national security threat.

WorldFirst is one of the main services used by Amazon sellers to handle transactions across the world so merchants can get paid in many different currencies on a single platform. An Amazon sellers group sent an email to members on Friday suggesting that WorldFirst customers switch to rival service Payoneer, which "can help if you are selling in the US, UK, Europe, Canada, Japan, China, Australia, and Mexico," the message said.

WorldFirst said service for customers outside the U.S. and Canada will be unaffected by the change. Clients in those two countries were told that between Jan. 31 and Feb. 7, they could only make outbound transfers to existing beneficiaries. After Feb. 7, any balances would be returned to the sender, and after Feb. 20, the company would have no live phone or email service.

For Ant, the expected acquisition of WorldFirst supports the company's global push and expansion beyond mobile and online payments service Alipay. Ant CEO Eric Jing told CNBC in November that his company was investing in technology services for banks so that it's not limited to payments.

Ant is viewed as an IPO candidate, but Jing said the company doesn't have a "timetable for that." Alibaba agreed exactly a year ago to acquire 33 percent of Ant, and has said it won't have any control over the company. Alipay was spun out of Alibaba in 2011.

WATCH: Ant Financial says it doesn't have a "timetable" for an IPO

Ant Financial says it doesn't have a 'timetable' for an IPO