Maverick China Research - Maverick China Research

Foreign Banks Not Allowed to Become Shareholders in China Unionpay

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.

China Earthquake Online Donations via IPS

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 and Commercial Bank of China, China Minsheng Banking Corp, Industrial Bank, Guangdong Development Bank, Shanghai Pudong Development Bank, Shenzhen Development Bank, and Huaxia Bank.

Yeepay's New Payment Idea

YeePay recently announced an innovative (if somewhat roundabout) payment solution for 3G.cn, a leading Chinese WAP-portal. 3G.cn users were already able to buy its products and services -- which include games, email, e-books, forums, and ringtones -- through China Mobile's Monternet and China Unicom's Uni-info platforms.

The new service also uses the mobile operators' platforms. A user first purchases a prepaid Easyown card (a.k.a. Shenzhouxing, China Mobile's most basic and most popular prepaid service) and then enters the account number and PIN on the card to make the payment. After payment is complete, the remaining sum is transferred to the user's YeePay account (if it exists) or into a new account, which the user is given the option of opening. Th card can no longer be used to top-up one's mobile account directly; however, YeePay does offer just such a service, so once the funds are in one's YeePay account, they can be used for mobile top-up.

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Payment China 2008 Conference Takeaways

Last month was the second Payment China 2008 conference, hosted by our friends at Global Leaders Institute. Below are a few general observations on the event:

• 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.

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Citibank and Amazon.com Take the Mobile Plunge

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.

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Beijing Aims for Octopus but Growth Still at a Snail's Pace

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.

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TIF Forum: Mobile Payments in China & the Asia Pacific

We recently made a presentation about mobile payments in China at a forum hosted by our friends at TRP and KPMG. We'd like to offer a special thanks to Peter Lovelock and his team for organizing! A copy of our presentation is available below.

Please feel free to contact us for questions or comments.

Jet Li to Partner with Alipay?

Kung Fu legend Jet Li has recently visited Alibaba's headquarters in Hangzhou for the sixth anniversary of Alibaba's instant messenger, Chengxintong. Jack Ma gave Jet Li a personal tour of the premises and speculation has risen for the visit's purpose.

Some sites such as www.20ju.com and www.qihoo.com are speculating that Jet Li may be talking about a partnership between his charity fund (the One Foundation ) and Alipay. Jet Li has already partnered with Tenpay, Tencent's payment subsidiary. Tenpay's users, however, are mostly young and fashionable teens who use Tencent's QQ services, while Alipay, in contrast, may bring in older users with higher expendable incomes who are more likely to donate, as some forums posters suggest.

However, these are still all rumors and speculations at this stage.

Alipay Account Assets Frozen by Shanghai Court

According to this article, on the request of an advertisement company, an online apparel sale company's Alipay account was frozen by a court in Shanghai as part of a contract dispute. This is one of the first times a Chinese court has successfully take action on online virtual assets.

After the request was raised, a person in the court left for Alipay's headquarters to freeze the account (with the help of Alipay).

Because users can deposit money in make online payments through an Alipay account, it has some of the characteristics of a bank account. This ruling shows that for legal disputes, Alipay accounts can also be treated as bank accounts and "frozen".