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The Green Sheet Online Edition

December 28, 2015 • Issue 15:12:02

The Mobile Buzz:
China on mobile fast track

In China, which has an estimated 672 million individual mobile subscribers, compared with 190 million in the United States, third-party mobile payments have penetrated daily life at an unprecedented rate. The trend began in 2013, and China surpassed the U.S. market in total revenue generated in 2014.

Several factors contributed to high mobile adoption and usage in China. Widespread availability of inexpensive smartphones has made them widely accessible. Infrastructural growth to support mobile payments has also attracted scores of mobile users, with Alipay, WeChat Payment and Baidu Wallet becoming the de facto payment apps of choice.

A midyear study conducted by GSMA Intelligence, How 4G Devices in China Are Transforming the World's Largest Mobile Market, found that smartphone adoption in China, as a percentage of connections, reached 62 percent in March 2015. GSMA predicted that by the end of 2015 that figure will rise to 68 percent.

"Chinese smartphone vendors such as Xiaomi, Huawei and Lenovo are benefiting from a rich local smartphone manufacturing and design ecosystem, which is allowing them to compete effectively with foreign smartphone brands such as Apple and Samsung," said Hyunmi Yang, Chief Strategy Officer at GSMA.

Although opportunity exists in China, entry from vendors outside the country continues to be a lengthy process, as many U.S.-based companies have discovered. Looking ahead, Yang said, "There remains a large market for producing budget smartphones that enable people to connect to the mobile Internet for the first time, while the increasing number of affluent customers in China is also fueling a growing luxury smartphone market."

Mobile pay advances

As the mobile sphere continues to forge ahead, global players are beginning to make inroads from within and outside China. In late November, Apple Inc. was said to be in discussions with China's four largest state-run banks to launch Apple Pay in China as early as February 2016, but regulatory hurdles could delay matters. According to Apple, China is on track to become the largest market for its products in the future.

Inside China, Alipay, the mobile wallet of Ant Financial Services Group, an affiliate of Alibaba Group Holding Ltd., has emerged as a market leader with 400 million registered users in China. According to research firm Analysys Mason, Alipay represents about 45 percent of China's mobile payment market followed by WeChat Payment, a mobile wallet on the Tenpay platform launched by Tencent Inc.

According to Alipay, its mobile wallet users are savvy shoppers, and interest in purchasing U.S. products climbed markedly during the 2015 holiday shopping season, one year after it introduced the Alipay ePass program. The program allows U.S. brands to sell directly to Chinese consumers using localized payments and direct shipping.

On Dec. 12, 2015, another major player in China, China UnionPay subsidiary UnionPay International, launched a mobile payment service called QuickPass in Beijing, in cooperation with over 20 commercial banks in China. UnionPay is a bankcard association that was established under the approval of the State Council and the People’s Bank of China in 2002. The Shanghai, China-based card association has more than 400 domestic and overseas associate members.

Prior to QuickPass, UnionPay had launched a series of mobile payment products and services in conjunction mobile manufacturers, telecom operators and wearable device manufacturers. But the new mobile venture marks the first large-scale joint effort between UnionPay and Chinese financial institutions. QuickPass supports a combination of contactless payment technologies, including near field communication (NFC), host card emulation, trusted service manager and tokenization.

"It only takes a smart phone with NFC functions (coupled with Android 4.4.2 operating system or above) to create a bankcard substitute – the QuickPass card," said UnionPay in a press statement. "The smart phone can then be used for making tap-and-go payments at any POS terminals with QuickPass signage or for secure online payment via UnionPay Online Payment (or UPOP) with no SMS verification required."

According to UnionPay, the QuickPass mobile payment service is available at more than 10,000 locations in 25 franchises across mainland China. Franchises, including Carrefour, McDonald's, Watsons, FamilyMart, and COSTA, will provide exclusive offers for QuickPass users. More merchants are expected to onboard soon in this rapidly developing mobile market. end of article

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