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.
This is the third part of our Mobile Top-up and M-Payment Adoption in China series, following on from a post called Why M-Payment Hasn't Taken Off 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.
Without any real consumer demand, this focus on the network will continue to hinder m-payment adoption and growth. We believe that the fastest solution is to first find the users and then expand the portfolio of services available. Companies should start from simple services with as few partners as possible and develop a user base. With a group of consumers who are already comfortable with the idea of mobile payment, mobile payment providerss can gradually expand their service offerings.
This strategy has proven effective in at least two notable electronic payment success stories:
-
Online payment company PayPal started out as a broad platform for Internet-based electronic payment, but at first it failed to gain traction. Largely through word of mouth, PayPal became the payment method of choice for online auctions at eBay. (This happened before eBay acquired PayPal; in fact, it was a key motivation behind the acquisition.) Leveraging its considerable online auction user base, PayPal has since been able to expand its payment services to a much broader range of customers.
-
The Octopus card began as an electronic payment system for public transportation in Hong Kong. Replacing an older generation of stored-value cards, the Octopus card quickly gained a base of several million users. Building from its initial focus on transportation, the card can now handle payment with a growing number of partners, including 7-Eleven convenience stores, McDonald's restaurants, and vending machines.
Although PayPal and Octopus are not run through mobile networks, they do address similar needs by providing a faster, safer, and more convenient alternative to traditional payment methods. Both services have succeeded by starting simple and developing a core of loyal users.
Comments