Abstract

The development of mobile payments services requires the creation of an entire ecosystem, which consists of financial institutions, telecom operators, third-party platform providers, and various types of merchants. Once this ecosystem has been created, the next challenge is to educate consumers. Telecom operators have a particularly important role to play within the mobile payments ecosystem, with responsibilities that extend from communications to money flows; the adoption of mobile payments can significantly expand the range of applications available to mobile phones.

In China, the telecom operators involved in the development of mobile payments services are China Mobile and China Unicom, with CUP providing the inter-bank transaction system and companies such as UMPAY and YeePay operating the mobile payments platforms. As of the end of 2007, China's mobile payments platform providers had achieved only limited success in getting merchants to sign up for their services. Those merchants that are making use of mobile payments services are heavily concentrated in a limited number of sectors, including billing, pay-paid mobile phone account recharging, and ticket purchasing. On the demand side, a large percentage of Chinese consumers are not familiar with mobile payments. This awareness issue, combined with security concerns and usage habits, has been a major obstacle to the growth of mobile payments in China.

A large number of companies have been attracted by the growth potential that China's mobile payments sector appears to offer. The services that have proved most successful so far are those that, although only involving small sums of money, are closely linked to consumers' daily lives, such as the recharging of mobile phone accounts, utility bill payment, and plane ticket purchasing. In the next stage of development, those companies involved in mobile payments will need to further cultivate consumers' awareness of, and willingness to use, mobile payments, while also giving more thought to the development of viable business models. Companies should be focusing on the development of new products and services that can make life more convenient for consumers; only then will it be possible to achieve sustained, rapid growth in mobile payments usage.

Appendix

Research Scope

This report explores the development of mobile payments services in China. The first section of the report presents an overview of the mobile payments services that have been developed in China, examining both the value chain and the number of users. The report then goes on to look at the mobile payments initiatives of mobile phone operators China Mobile and China Unicom, and at the main mobile payments platform providers.

Glossary of Terms

List of Companies