Recently the president of China UnionPay (CUP), Xu Luode, announced that foreign banks will be able to issue bank cards within the CUP network but cannot become CUP shareholders. CUP is China's sole national bank card network, and its shareholders are China's domestic banks, with several of the largest holding the most shares. The statement was made after it was announced that The Bank of East Asia became the first foreign bank to issue bank cards (debit and credit cards) in China. Foreign banks have been allowed to offer limited banking services but had not yet been allowed to issue bank cards in China before.
CUP is supervised essentially as a part of the government. Xu's statement shows that despite the continued, gradual opening of China's banking sector to foreign companies, the government will continue to call the shots.
The recent earthquakes in Western China has rattled the lives of many. To offer support to the victims and their families, Chinese online payment company IPS is now accepting cash donations via its website and all proceeds will go to the Red Cross Society of China.
Donations are accepted via IPS' payment system through the following partner banks: China Merchants Bank, China Construction Bank, Agricultural Bank of China, China Everbright Bank, Bank of China, Industrial & Commercial Bank of China, China Minsheng Banking Corp, Industrial Bank, Guangdong Development Bank, Shanghai Pudong Development Bank, Shenzhen Development Bank, and Huaxia Bank.
Compared to last year's event, the conference focused less on new payment solutions and more on upgrades and improvement to more traditional systems. Fraud protection, for example, was a popular themes, with presentations from China Minsheng Bank and Retail Decisions, among others.
Some of the attendees who had flown in from outside China complained that there were too many people and presentations that discussed specific markets or global issues but without any connection to China.
We met quite a few more attendees from India, than one usually sees at conferences in China--perhaps further evidence that these two markets are increasingly probing for opportunities in each other's market.
We noticed fewer Chinese payment startups in attendance, perhaps because of the higher prices compared to last year.
We have more posts planned on the actual content of the event, but the overall mood seemed to be that not much had changed in the past year.
Recently, mobile payment and mobile commerce pundnits worldwide added two industry giants to their list of supporters - Citibank and Amazon.com.
Citibank announced a partnership with m-payment upstart, Obopay , to offer a mobile P2P (person-to-person) payment service. According to their press release , the trial is set to begin this summer and will be made available to checking account holders in the US. This is pretty big news for m-payments m-commerce supporters as one of the largest banks in the world and one of the largest m-payment startups are teaming up. Citibank may have enough coverage in the US to jumpstart the industry as a whole, in the US at least, and perhaps later in other countries.
Amazon.com, has recently launched its "TextBuyIt " service which allows its customers to shop on items listed on its website via SMS. The service is available to all Amazon Payment users who have mobile accounts with one of nine mobile operators. Along with its "TextPayMe " service, which offers mobile P2P transfer, Amazon.com is showing that it is now only leading the way with internet-based e-commerce, they are also positioning themselves to be a major player in the developing mobile commerce sphere.
In China, this news would be comparable to ICBC and Taobao.com announcing their commitment to mobile payments and mobile commerce services. Given the current flux in the market with unclear government regulations, the lack of competition in the mobile space, and a overall emphasis on online payments and online commerce instead, it seems that we are at least a few years away for any similar types of movement in China's mobile payments and mobile commerce market.
For further analysis on the current state of mobile payments in China, check out the presentation I recently gave at a mobile payments forum in Beijing.
Last August we noted the partnership between payment terminal supplier Blue Bamboo and payment provider Kpay/Kuaipay to establish a payment network for Beijing's popular Yikatong contactless transit card (also sometimes called "SuperPass").
Uptake of Yikatong cards in the last several years has been excellent; last September, the authority in charge of Yikatong, the Beijing Municipal Administration & Communications Card Co. Ltd. (BMAC), announced that over 13 million cards had been issued and approximately 15,000 new cards were being issued every single day. As penetration approaches 100% among Beijing's nearly 18 million residents, this growth pace will decline, but we do believe the number of Yikatong cards has already surpassed 15 million to date.
Whatever the exact number is, it's clear just how great the potential is for an Octopus-like network in Beijing. But so far in 2008, only three new merchant partners have been added--Weiduomei bakeries, Jia He Yi Pin Congee, and Jack Hut drink shops--bringing the total number to seventeen. And with new subway lines scheduled to open in time for this summer's Olympics, not to mention a long overdue pay-by-distance system for subway tickets, we expect it to be a while before the merchant network reaches a critical mass and Beijingers start using their Yikatong cards for food and other small purchases. Signing up a well known, heavyweight merchant partner or two--McDonald's, KFC, or supermarket chain Jingkelong, perhaps--wouldn't hurt, either.
