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Mobile Payment in China
—— Concepts, Current Situation and the Future
Fang Fang
Senior Strategy Analyst
Shanghai Pudong Development Bank
Mobile financing is getting popular nowadays in China as wireless network promoted to 3G
Mobile Payment:
online remote payment onsite contactless payment
Mobile Banking:
supermarket
shopping mall
metro
utilities payment
online shopping
The services offered to customers to allow them to access a bank account from mobile phones, i.e., the on-line banking from mobile phones.
Major functions: account management, fund transfer and etc.
The services offered to customers to allow them to make the payment by mobile phones, either linked to a bank account or not.
Japan ： NTT DoCoMo
Osaifu-Keitai – ‘e-wallet’
iD mobile payment platform
DCMX – consumer loans
Japan ： NTT DoCoMo
Osaifu-Keitai – ‘e-wallet’
iD mobile payment platform
DCMX – consumer loans
Korea: SK Telecom
MONETA – mobile credit card
Korea: SK Telecom
MONETA – mobile credit card
Philippines: SMART
Smart money – online payment
& money transfer
Philippines: SMART
Smart money – online payment
& money transfer
Kenya: Safaricom
M-PESA – money transfer
Kenya: Safaricom
M-PESA – money transfer
While many Best Practices in the World ……
Mobile Payment in China is only at the beginning
Mobile Payment
SolutionsAdvantages Disadvantages
Intelligent SD card
iSIM
SIMPASS
NFC mobile phones
RF-SIM card:
‘e-wallet’ with no bank
accounts linked
Just need to change a SIM card, easy to promote
Not compatible with PBOC2.0 standard, need to put new POS machines
Need to install an antenna or change a mobile phone for onsite contactless payment
A financial IC card is embedded, compatible with PBOC2.0 standard, can leverage current POS machines with update
Strategic Alliance:
China Mobile & SPD Bank, China Unicom & China Industrial Bank
Several Issues need to be addressed ……
1st Issue: Technical Standards
2.4G2.4G frequencyfrequency The ‘e-wallet’ developed by China Mobile applies 2.4G standard. 2.4G standard is not compatible with the current standards applied in financial and metro areas. The technology maturity needs to be further tested. If apply 2.4G standard to mobile onsite payment, the signal is quite strong and customer just needs to change a SIM card. Need to put new POS machines other than update the current POS machines for bank cards.
2.4G2.4G frequencyfrequency The ‘e-wallet’ developed by China Mobile applies 2.4G standard. 2.4G standard is not compatible with the current standards applied in financial and metro areas. The technology maturity needs to be further tested. If apply 2.4G standard to mobile onsite payment, the signal is quite strong and customer just needs to change a SIM card. Need to put new POS machines other than update the current POS machines for bank cards.
13.56M frequency13.56M frequency 13.56M standard is quite mature
internationally.
In China, PBOC2.0(the standard
for 2nd generation of financial IC card)
is 13.56M.
If apply 13.56M standard to mobile
onsite payment, the signal is not quite
strong, hence an antenna is required.
China Union Pay prefers 13.56M
standard since it is compatible with
PBOC2.0.
13.56M frequency13.56M frequency 13.56M standard is quite mature
internationally.
In China, PBOC2.0(the standard
for 2nd generation of financial IC card)
is 13.56M.
If apply 13.56M standard to mobile
onsite payment, the signal is not quite
strong, hence an antenna is required.
China Union Pay prefers 13.56M
standard since it is compatible with
PBOC2.0.
Neither party takes leading role so far
2nd Issue: Business Model
wireless operator involvement High
High
Low
Low
There is no answer for the best model
operator-leadcustomer->operator->merchants
bank accounts service
bank-leadcustomer->bank->merchants
wireless service
3rd party-leadcustomer->3rd party->merchants
accounts & wireless service
cooperative model
customer-> ->merchantsbank
operator
3rd Issue: Customer experience & Consumption environment
89.1% internet users ever heard of mobile banking, but only 33.2% used it.
Customers are getting used to swipe bank cards for onsite payment.
Signed merchants & compatible POS machines are far from enough.
Need to promote to more business & applications.
Different mobile phones make customer experience different.
Security & Regulatory issues.
We are optimistic about the prospects for mobile payment in China
Huge potential customer base: Mobile phone is more popular than computer in China. Almost 0.8 billion mobile subscribers, 0.23 billion of them are using mobile internet. Number of 3G subscribers doubles each 5 month.
Convenience of mobile financing: Anywhere 、 anytime services: reach financial services with less restrictionsAccelerating financial inclusion: provide low-cost financial services in rural areas
Banks and operators are realizing the importance of cooperation: Banks control the customer accounts 、 clearance/settlement channel 、 POS machines; Wireless operators control the SIM card 、 mobile phones 、 wireless network. Both parties are irreplaceable.
End of branch? Branches are everywhere!
market campaigns, loyalty programs, e-coupons
remote payment, e-wallet, e-debit card, e-credit card
bill payment
onsite small amount contactless payment
onsite large amount contactless payment
transaction and payment among users, e-business
What matters is not the physical shape of the branchesbut who controls the customer accounts
Thank you!
