Mobile Payment:

New Tendency of Future Payment

Electronic Banking Department

Shanghai Pudong Development Bank

June 10, 2014

Contents

The Era of Mobile Payment

Characteristics and prospect

of Mobile Payment

SPD Bank & Mobile Payment

I、The Era of Mobile Payment

• Wide spread of mobile smart devices: According IDC, U.S.A, the

global shipments of smartphones in 2013 reached 1 billion, which is

3.16 times of PC

• Lower costs of mobile smart devices: low entry barrier for ordinary

customers

Rapid Spread of Smart Devices

1、The Fundamental environment of Mobile Payment tends to

maturity

• All cities at or above the country level in China are covered with 3G

mobile signal.

• December 4, 2013, the Ministry of Industry and Information

Technology officially issued 4G license. China will gradually step into

the 4G Era, whose transmission speed is 10 times faster than 3G.

Good Foundation of Mobile Internet

• In 2013, the trading volume of

the third-party Internet

payment services in China was

5.37 trillion Yuan; the trading

volume of mobile payment is

1.25 trillion Yuan, increasing

by 707.0%.

• In 2012, the trading volume of

Internet Payment is 3.66

trillion Yuan; the trading

volume of mobile payment is

1511.4 billion Yuan,

increasing by 89.2%

• (Sources：iResearch）

2、Rapid Development of Mobile Payment

0.080.15

1.25

0

0.2

0.4

0.6

0.8

1

1.2

1.4

2011 2012 2013

The Trading Volume of Mobile Payment in China in the latest

3 years (trillion）

3、More Attention to the “thumb "Market

• Financial and non-financial institutions are paying more

attention to mobile payment:

• Financial institutions: widely popularize mobile banking

• Non-financial institutions: launch mobile phone Apps,

attract customers by free or discounted services.

Fierce Competition

• “DiDi Taxi ”and “KuaiDi Taxi”

• Free commission charge for mobile banking services

4、The “Mobile” Thinking and Behavior of the Public

• Social networking：Weibo, WeChat

• Food：Dianping.com, Group Purchase

• Transportation：Taxi Booking, Mobile Phone Navigation,

NFC Mobile Payment

• Payment：Mobile Banking, WeChat/Alipay, NFC Mobile

Payment

• Etc.

“Mobility”has been infiltrated into people’s daily life

II、Characteristics and prospect

of Mobile Payment

Real Time

GreenEcosystem

1、 “Finance in Real Time”

• Mobile Payment treats the cellphone as the carrier, and has

the service capacity of 7/24 hours, which helps customers get

rid of the dependence on physical banking branches and

makes it possible to obtain the full bank card services such as

application, download, deposit, replacement, inquiry on air.

Anytime

Anywhere

Anyway

2、 “Green”

• Mobile Payment integrates bank cards into NFC-SIM

cards, and thus replacing traditional physical band cards.

It effectively reduces card costs and the waste of social

resources.

3、“New Ecosystem of Finance”

• Mobile payment involves various parties such as cellphone

manufacturers, chip suppliers, telecommunication carriers, the

China UnionPay, commercial banks and consumers, which

becomes a closely-linked ecosystem. Each party should take

advantage of its own strength and closely cooperate with each

other so that mutual benefits can be ultimately achieved.

Bank/China

UnionPay

Chip

supplierCellphone

manufacturer

Telecommunication

carrier

Consumer

4、Mobile Payment has prosperous Future

• The PRC State Council — launched《Several

Suggestions about Promoting Information Consumption to

Expand Domestic Demand》, encourages and supports

the development of mobile payment.

• National Development and Reform Commission &

People’s Bank of China — launched《The Notification

about the Organization of the Pilot Work of Mobile

Electronic Commerce, Financial, and Science

Technological Services Innovation》, pushes forward the

experimental work of mobile payment development in

some specific cities.

Policy Support

• People’s Bank of China, the Ministry of Industry and Information

Technology, telecom carriers, the China UnionPay, and

commercial banks have reached the agreement of 13.56 MHZ

and PBOC Standard.

Unified Standard

•Cellphone manufacturers, telecom carriers, the China UnionPay

and commercial banks have a clearer division of responsibilities on

terminal access, environmental establishment and customer

development.

•By far, there are over 3 million contactless POS in China that can

accept mobile payment, covering transportation, department store,

dining and pharmaceuticals industries.

More Mature Environment and Market

5、Mobile Payment has prosperous Future

Ⅲ、SPDB Bank’s practice on mobile payment

Technique

Concept

Market

Innovating

For Better

Life

NFCPayment

Mobile Bank

WeChatBank

Leading in

NFC near-field

payment

Special

advantage of

WeChat bank

Rapid

expand of

mobile bank

1、SPDB Bank Mobile Payment system

2010

• Strategic cooperation with CMCC, take NFC Payment as important cooperate product

2011

• Developed the first non-contact payment card, gained over 1 million customers

2013

• Developed the first NFC-SWP mobile payment product

2014• Application on Shanghai subway

2、Course of SPDB NFC development

Technique

ApplicationFunction

Product

3、 Characteristics of SPDB BANK Payment

（1）Technique Leading

Dec,2012. SPDB Bank and CMCC first finished NFC-SWP

mobile payment development.

Feb,2013. SPDB Bank and China UnionPay first finished

system access.

SPDB Bank has been the first bank that cooperate with

China UnionPay and telecom operators.

Product forms：Shaped card\ Payment based on all-

terminal cellphone\ Payment based on all-terminal

NFC-SIM

Comprehensive card：Debit card\credit card

（2）Product Leading

IC card whole life air

management: Air

application\Download\

Deposit\Inquiry\Change

card

CMCC & SPDB system

connection，SPDB NFC

payment can

immediately credit

approval by people’s

CMCC information

（3）Function leading

Air apply

Air

download

Air

inquiry

Air

deposit

Change

card

Feb,2014. SPDB Bank finished the updating of

Shanghai subway system with CMCC. People

can take subway by SPDB Bank’ NFC

payment. It’s the first case that NFC applies

on transportation industry.

（4）Application leading

Difficulties of NFC

Lack of NFC cellphone

variety, most cellphone

don’t support NFC

NFC should be

used in other

areas, besides

finance and

payment

People haven’t fell

into the habit of NFC

when payment

Cellphonevariety

Less application

of NFCCustomer’s

habit

（5）Some issues need attention of NFC Payment

• Professional financial service such as Investment, Wealth management, Remittance, Payment

• Remittance by two-dimension code、cellphone number

Personal service

Company service

Humanization

service

• Company account inpuiry, remittance or loan

Mobile

Banking

4、Mobile Banking— Rapid expandsion

5、WeChat Bank—leading Virtual Bank

微理财

• Cooperation with Tencent, provide financial

service by WeChat

• Customer service by

character\voice\image

• Based on wealth management, including

series service of withdraw

\payment\loan\travel, etc.