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LinQpay and IPS have just announced a China M-Payment Joint Venture. In the press release issued by LinQpay, a San Diego based mobile payment provider, the two parties announced an agreement to jointly offer mobile payment services as part of IPS's payment solutions: ...they have signed a definitive agreement to establish a joint venture that will provide several mobile phone based payment services for the Chinese market. The new service will combine LinQpay's leading mobile phone based payment services with IPS's Chinese payment platform, valuable client base and market leading position within China. Through the joint venture, LinQpay and IPS will create a full-featured mobile phone-based m-commerce platform that will provide both mobile extensions to IPS e-wallet and payment platform as well as complete out-of-the box m-commerce solutions.
This new joint venture is a major move by IPS to increase its competitive edge in China's growing payment market. Although one of the only few profitable payment providers in China, IPS's 1.5 million strong user base is dwarfed compared to its competition: Alipay with 50+ million, Tenpay with 25+ million, and YeePay with 10+ million. Although IPS focuses mostly on online payment services, it already has been offering its services through both fixed-line and mobile payment channels. These alternative payment channels are currently a very small part of IPS's business, however. The deal with LinQpay will allow IPS to offer its user base multi-channel solutions similar to competitors such as YeePay. The availability of more payment channels is in line with IPS's strategy to increase its relatively low user base through "Ai-mi", its e-wallet platform, as IPS vice president Sunny Cheung explains: "We believe IPS' e-wallet being accessed by mobile phones will open up a huge potential market in Chinese m-commerce. This drastically extends our payment gateway business from the internet users to the mobile phone users in China, especially those in the rural areas"
The strategy of using mobile payment to target China's rural areas resembles the one taken by another mobile payment provider, Smartpay. Smartpay has been offering mobile top-up services to China's rural population through a network of dealers and agents for quite some time. IPS's partner, LinQpay, is naturally enthusiastic about an opportunity to target China's 520 million mobile subscribers: "With the rapid growth of the Chinese mobile phone and payment processing spaces, we see all indicators pointing toward explosive growth in Chinese m-commerce," said James Byler, Chief Executive Officer, LinQpay, Inc.
We are somewhat less enthusiastic about the potential of China's mobile payment market and have yet to witness any indication of any explosive growth in the near future. On the contrary, there are quite a few obstacles still left to overcome before we see any significant growth or even China's first profitable mobile payment provider. In fact, some third-party payment providers have turned away from SMS- and JAVA-based payment channels almost completely, ain favor of online payment and fixed-line telephone payments. With that being said, this is still a good move for IPS. In order to remain one of the main players in China's payment sector, IPS must increase its relatively small user base. Indeed, IPS has been doing just this through "Ai-mi" and through alternative payment methods, which include the use of China Mobile prepaid phone cards to top up IPS's e-wallet account. Relevant Maverick China Research Reports: IPS - In the Money Through a Merchant Focus Mobile Payment in China: Bricks and Clicks Going Mobile? Recommended posts related to this article: The Unfulfilled Potential of Mobile Payment Mobile Top-up in China Series Cashing in on Cash-based e-Commerce Mobile Ticketing and M-Payments in China: Service providers trying to run before they can walk Yeepay’s Tang Bin Talks About the Future of e-Payment in China SmartPay, China Unicom Launch Mobile 'Toll Stations' in Anhui |
