|
This is the second part of our Mobile Top-up and M-Paymnent Adoption in China series, following on from a post called The Unfulfilled Potential of Mobile Payment. Right now Chinese consumers can already pay for a wide variety of products and services via m-payment: - Wireless value-added services (WVAS), including SMS, MMS, ringtones, ringback tones, and WAP-based services. (NOTE: In this report we do not discuss the WVAS sector, as our focus is on the vast majority of products and services outside the operator-controlled systems through which WVAS are bought and sold.)
- Phone and other utility bills
- Ticket reservation and purchase (including lotteries, air flights, movies, etc.)
- Mobile banking
Why, then, have none of these services besides WVAS become popular or profitable? In our August 2006 report, Mobile Payment in China: Bricks & Clicks Going Mobile , we identified several key factors contributing to the lack of growth:
Cash is king Cash is the most widely used form of payment in China. Convenience, security, and ingrained habit all continue to make cash the preferred payment method, even for many large transactions. Aside from those in Beijing, Shanghai, and other large cities where debit and credit cards are increasingly common, Chinese consumers by and large are content with the current cash-based system. Complex industry alliances limit availability The strongest backers of m-payment services in China are a group of mobile payment service providers (MPSPs), each of which maintains a network of partnerships with banks, merchants, and mobile operators. Each partnership needs to be negotiated separately, and even with large companies, these deals often cover just one province or city rather than nationwide. For users, this means that a service offered in one province might not available in another; for MPSPs, this can make establishing nationwide partnerships an extremely difficult endeavor.
No single MPSP has yet been able to bring together enough partners to provide a comprehensive set of products and services; instead, each maintains a limited network of partnerships. The potential user base for many products and services is often restricted to a single m-payment provider's network, a few cities and provinces, a few banking partners, and just one of China's two mobile operators.
Handset and calling plan limitations
Even if all the other requirements can be met, many of the more advanced m-payment services (such as for plane ticket purchase and retail purchases) require that one's mobile phone and calling plan allow Internet access through a WAP browser. While virtually all handsets are SMS enabled and more and more are WAP enabled, many users have second-hand or low-end models that either aren't WAP enabled or have small screens that make browsing text-heavy WAP pages difficult. Moreover, WAP access is not a standard offering with many of the most common prepaid plans, including China Mobile's Shenzhouxing service.
Designed for convenience, yet highly inconvenient for users
For the typical Chinese mobile user, setting up m-payment services can prove a daunting task, often far more complicated than existing methods. Take, for example, someone who wants to purchase plane tickets via m-payment:
- Registration: The user must register with both bank and MPSP separately; this usually involves a trip to the bank itself and to the MPSP's website or WAP site to fill in several forms, set up passwords, and confirm all services via SMS.
- M-Payment Service Provider: The user must conduct the transaction through either China M-World or NationM, the only two MPSPs currently offering this service.
- Bank: Assuming he chooses to register with China M-World, he'll need a bank account at China Construction Bank, Agricultural Bank of China, Bank of Communications, or China Minsheng Bank, China M-World's only four m-payment partners. While these banks are four of China's largest, they cover just a fraction of the nation's customers. China M-World's only longstanding partnership is with China Construction Bank; the other three partnerships began only in 2006.
- Operator: China M-World can process tickets nationwide for China Unicom users but in just 24 of China's 33 provinces for China Mobile users.
- Phone: He'll need a WAP browser on his phone, as the service is only available from China M-World's WAP site.
- Merchant: China M-World's service often shows tickets for only a few airlines; usually, a greater choice of flight times and prices is available online or through a local travel agent.
|
