Maverick China Research

While mobile top-up has a lot going for it, the fact remains that it has not caught on yet. We see several factors behind this:

While all major MPSPs above offer mobile top-up transactions, few are promoting it. Smartpay and YeePay are the only two that have paid much attention to top-ups, and both of them deal primarily with China Unicom, by far the smaller of China's two mobile operators. UMPay, a joint-venture between China Mobile and bank card network operator China UnionPay (and thus the best positioned of all MPSPs to work with China Mobile), has yet to show much interest in promoting mobile top-up to China Mobile's 225 million prepaid subscribers.

Mobile top-up allows users to add value to their mobile accounts without having to purchase top-up cards, which are most often found at supermarkets, convenience stores, and newsstands. More than any other product or service currently in development, mobile top-up has all the ingredients to become the driving force behind m-payment adoption in China.

China's m-payment industry is stuck in a rut, with little consumer demand and no comprehensive network of operators, banks, and merchants available that can match the selection, prices, and convenience of online or bricks-and-mortar payment.

Rather than pooling their limited resources together to benefit the industry as a whole, China's mobile payment providers are going at it alone, each aiming for total domination of the market. Many are attempting to offer a wide range of services all at once and are concentrating on expanding their complex partnership networks. While they do continue to make progress in this area, user growth continues to lag behind.

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?

Over the past ten years, the mobile phone has become as indispensable for many as the wallet - one simply doesn't leave home without it. At the same time, the phone has absorbed the functionality of a number of accessories and gadgets, from the old-fashioned (address book, wristwatch) to the modern (digital camera, music player). In the coming years, the mobile handset will likely resemble a mobile version of the computer: a fully customizable super-gadget with thousands of software-based applications.

The wallet, however, is one real-world accessory that has proven harder to transfer onto the handset.