Maverick China Analyst Blog

China 20/20 Whitepaper Preview: Interview with QiandaiPay on China's Mobile Payment Industry

Maverick China recently conducted an interview with Mr. Sun Jiangtao, Executive Director of QiandaiPay, a Beijing-based payment provider and recent recipient of a third-party mobile payment license. The interview was part of a series of interviews with leading m-payment figures in China for our upcoming white paper, China 20/20: The Future of Mobile Payment in China.

---

What is your overall view of the prospects for mobile payment in China?
The Chinese mobile payment market only started around 2001. In 2012, the pace of development is definitely accelerating. But I believe that 2013 is the year in which we will really see explosive growth.

China's Cash-on-Delivery Transaction Volume Halved Since 2009

In the upcoming 2012 edition of our Online Payment and E-Commerce in China report, we surveyed online retailers in China about the the most popular methods of payment for their products. One interesting finding is that cash-on-delivery, the payment method for 22.4% of transaction volume in 2009, makes up only half that amount today:

Breaking down the numbers by sector shows that consumer electronics transaction volume has seen the sharpest decline in cash-on-delivery payment. In 2009, 31% of consumer electronics transaction volume was made through COD; in 2012, that figure was just 12.5%, a drop of almost two thirds.

Payment for clothing, sporting goods, and accessories have also largely turned away from COD: In 2009, 21.9% of transaction volume was made through COD, compared to just 13.9% in 2012.

We will be covering more trends and interesting statistics in the upcoming Online Payment and E-Commerce in China report. Email us at This email address is being protected from spambots. You need JavaScript enabled to view it. for more details!

Happy Chinese New Year from Maverick China Research!

Dear clients, colleagues, and friends,

We wish you a pleasant holiday and happy Year of the Dragon!

 

 

Another Look at Taxi e-Payments in Beijing and Shanghai

Beijing taxi drivers, like their counterparts around the world, are known for being willing to talk about anything and everything. But one thing you won't hear them say, at least not yet, is “用卡还是现金？” ("Will you be paying by cash or card?")

It's a question I heard often on a recent trip to Shanghai over the Chinese New Year holiday -- in fact, I was asked in every taxi I took. The card in question is the Shanghai Public Transportation Card (SPTC), the contactless payment card used in subways, buses, taxis, and other methods of public transport. One driver I spoke to in Shanghai estimated that 20 percent of his passengers paid with the SPTC. He wasn't sure why card payments were so popular but speculated that it was partly due to the popularity of the SPTC as a gift. Like any gift card, recipients tend to spend it more freely then they would their own cash -- in this case, splurging on a taxi instead of a bus or subway.

The gift card theory, while interesting, is probably a minor factor at best. Here in Beijing the Yikatong card serves a similar purpose as the SPTC, but while many Beijing taxis can accept Yikatong payments, I've never heard a driver here actually suggest that I pay with one. Last year one of my colleagues wrote about the difficulties of using Yikatong for taxi fares in Beijing and targeted an inconvenient reimbursement system for drivers as perhaps the greatest obstacle. From what I've seen, little progress has been made on that front. And as long as drivers keep up their tacit agreement to discourage Yikatong use, it's going to be cash payments as usual in Beijing's taxis.

Would a "Mobile Direct Bank" Work in China?

At the Financial Channels and Payment Innovation China 2011 event in Beijing on December 8, one of the more interesting presentations was given by Mr. Makoto Shibata from Tokyo-Mitsubishi UFJ Bank. Mr. Shibata talked about Jibun Bank, a venture launched in 2008 between his bank and KDDI, Japan's second largest mobile operator. With most banks viewing mobile banking as simply an add-on to their core services, Jibun Bank has taken the opposite strategy and made m-banking its primary service. Mr. Shibata argued that mobile banking is best suited to the younger generation, which is comfortable with mobile technology and does not want to stand in line at a branch to conduct simple transactions. He also pointed out that many young people do not have computer access at home (though they would at work), but almost all have mobile phones.

Maverick China's Boaz Rottenberg elected Vice Chairman of Ischam China

Maverick China Managing Director Boaz Rottenberg was recently elected to the Board of Directors of the Israel Chamber of Commerce in China where he will be serving as the Vice Chairman of the board. The Maverick Team congratulates Boaz and wishes him and the chamber a good year ahead.

China Issues Third Batch of Third-Party Payment Licenses on Final Day of 2011

On December 31, 2011 the People's Bank of China released a third batch of third-party payment licenses (Chinese language article). Sixty-one companies received licenses, bringing the total number of licensed third-party payment providers in China to 101.

All three of China's telecom carriers -- China Mobile, China Unicom, and China Telecom -- received licenses. Most companies were awarded licenses for the first time, though several previous licensees recieved additional licenses during the latest round.

The announcement came as somewhat of a surprise, though there were rumors earlier in December that another batch of licenses was coming out. On the PBOC website (Chinese), the licenses are listed as being issued on December 22.

To learn more about about mobile payment in China, including profiles of all m-payment licensees, check out our latest report, Mobile Payment in China 2011-2012 Edition. (Updates coming soon will include all of the newest m-payment license recipients.)

China Unicom's WO+ app platform unveiled

On December 9, I attended the China Unicom Mobile Internet Industry Summit 2011 here in Beijing. The event was a showcase for WO+, China Unicom's new platform for developers to host their mobile apps. Actually, WO+ is much more than that; Calvin Smith has written a thorough analysis of it over at the Mobisights blog. During the panel discussions on the mobile internet, angel investor Yang Ning made an interesting point about the many app stores and platforms popping up in China. Mr. Yang argued such platforms should be "evolved products" and should not start out trying to be app platform. He advised companies to focus at first on building up a user base by developing applications with a social networking aspect. For this reason he thinks that Ravio's Angry Birds still hasn't reached its full potential.

On a sidenote, it was amusing to see Sina Weibo and Tencent Weibo screens placed opposite each other during this conference, in an imitating of the real-world face-off between China's two microblogging leaders.

Maverick China Interviewed by Reuters on Mobile Payment in China

Maverick China managing director Dave Carini was recently interviewed by Reuters on China's mobile payment industry. Quotes from the interview appeared in both a news article and accompanying video piece.

The news article examined the mobile payment industry's development in China, driven by the consumption boom here. It also covered the new license requirements for third party payment providers by China's central bank. Dave discussed government's policy regarding these regulations:

It's difficult to say what the government's policy is going to be in terms of enforcement, because they haven't really had any chances to enforce things yet.

In the video interview, Dave also looked at the future prospects for China's m-payment market:

In terms of transactions and overall users, it is already as big or bigger than in the US and the other markets. But I think in the next two to fours years, in just about every area, China's online payment market is going to surpass the US.

Maverick China Has Moved to a New Office!

After eight relaxing months in the picturesque suburbs of Changping, it was time to get back to the hustle and bustle of the big city. So on September 20, 2011, we packed up and moved -- right back into the same building we left at the end of last year. We're two floors up from our previous location and have added a new phone number, so please note the changes:

Dongwai Building 10/F #1012
12 Xinzhong St., Dongcheng District
Beijing, China 100027

北京市东城区新中街乙12号东外公馆10层1012室

Phone: +86-10-6416-2686; +86-10-6416-8586

As always, you can find our latest contact information on the Contact Us page.