China Mobile extends cell phone pay network
- Source: Global Times
- [10:23 July 06 2010]
- Comments
A customer pays for coffee by swiping his cell phone on a mobile point-of-sale machine in a Starbucks branch on Weihai Road Monday. Photo: Cai Xianmin
By Zhou Mi
China Mobile is to extend the reach of its proprietary cell phone payment system through an agreement with the parent company of Lotus Supermarkets.
Shanghai Mobile, China Mobile's Shanghai subsidiary, signed a contract with Chia Tai Group last Friday to bring its cell phone payment system to Shanghai's 21 Lotus Supermarkets, which will allow users of China Mobile's cell phone payment system to swipe their phones to pay their bills.
The system China Mobile uses for its cell phone payment service is a different one to that of China UnionPay, which cooperates with China Mobile's rivals China Unicom and China Telecom to provide cell phone payments.
Mao Weiliang, vice general manager of Shanghai Mobile, said that China Mobile will also apply China UnionPay's standard to their cell phone payment system while promoting its own standard, China Business News reported Monday.
However, China Mobile's system could stand to lose out if the government chooses to issue regulations to standardize the cell phone payment sector.
"The trend is to have only one standard in the market. If the government is to issue regulations on the standards, the one most likely to get the operational license is China UnionPay's, since it has such a strong influence in the banking industry," Xiang Ligang, founder and CEO of CCTIME.com, a Beijing-based telecom information provider, told the Global Times Monday. "The wise choice for China Mobile is to follow China UnionPay's standard, as it will be doomed to fail if it confronts China UnionPay in a standard dispute."
The cell phone payment system is rising as a new business area in China. It allows consumers to pay their bills by just swiping their cell phones with a special SIM card or a special phone. The emerging market has attracted all three of China's telecom giants.
China Unicom and China Telecom signed contracts with China UnionPay to trial their cell phone payment system for small bills in Shanghai this year, adopting China Union-Pay's standard. Meanwhile, China Mobile has developed its own standard for cell phone payments, which can be used to pay for goods in some Starbucks and Lianhua supermar-kets near the Expo site.
The two standards are distinguished by their transmission frequency, with China UnionPay's using 13.56 megahertz, while China Mobile's uses 2.4 gigahertz.
"The cost of applying the 2.4 gigahertz standard is higher, since there is only one manufacturer making compatible equipment, while for 13.56 megahertz, there are many," Xiang said.
According to a report released early last month by iResearch, a Shanghai-based consulting firm, the transaction size for China's cell phone payment market in 2009 was 2.4 billion yuan ($353 million), double that of 2008. It is expected to reach 2.85 billion yuan ($419 million) in 2010.
