Cellphone debit payment system in the pipeline
- Source: Global Times
- [10:52 June 22 2010]
- Comments
A commuter swipes his cellphone to pay for entry to the subway at People's Square station. There are 1,500 special gates at subway stations across the city that accept payment from cellphones that use the system. Photo: IC
By Zhou Mi
Bank of Communications is preparing to launch a SIM card in cooperation with China Unicom that can also act as a debit card, allowing users to pay for goods and transportation in Shanghai by swiping their phones.
Bank of Communications said in an announcement on Saturday that it has developed the SIM card and the special phones needed to use it with China Unicom and national card payment service provider China UnionPay. The statement said this is the first time a Chinese bank has worked with a telecom operator to provide such a service.
The phones will be sold in China Unicom stores. Those wishing to use the service will need to have an account at Bank of Communications, where they will also need to apply for one of the special SIM cards.
The cellphones can be swiped at point-of-sale terminals bearing the China UnionPay logo to purchase goods up to a value of 1,000 yuan ($147). The funds will be debited from the user's Bank of Communica-tions account.
"It will still take quite a while for us to put this into practice," Wang Weidong, general manager at Bank of Communications' personal finance department, told the Global Times Monday. "A lot of things are not yet decided and there is still a lot of work to do before the products go to market."
According to Wang, the cards are expected to be sold in some desig-nated bank branches in Shanghai at first, with the intention of taking the program nationwide later on.
Since last year, China Unicom and China Mobile have offered services allowing people to make payments using their cellphones. However, these have relied on special accounts provided by the mobile operator that users can top up.
China Unicom's existing service allows users to pay for public trans-port, while China Mobile's also allows users to make small payments at participating retailers such as Starbucks, McDonald's and Family Mart.
This March, China Mobile purchased a 20 percent stake in Shanghai Pudong Development Bank in order to further develop its mobile phone payment business.
However, it will take time to allay fears among some consumers regarding the security of payments using mobile phones, particularly those that link directly into a user's bank account.
"I am worried about information security, especially if it links to my account and does not require a password," Chen Zhenxun, a 24-year-old office worker in Shanghai, said.
Wang told the Global Times that security measures for the new pay-ment system have not yet been finalized.
According to a report released earlier this month by iResearch, a Shanghai-based consulting firm, the transaction size of China's cellphone payment market in 2009 was 2.4 billion yuan ($353 million), around double the level of 2008. It is expected to reach 2.85 billion yuan ($419 million) for 2010.
