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.
Over the next few weeks we will cover Mobile Top-up and M-Payment Adoption in China. This series will take a closer look at mobile top-up, a service which allows users to pay their phone bills through the phone itself. We will identify the factors currently hindering m-payment growth in China and show how top-up may just be the "killer-app" that introduces m-payment to China's 500 million mobile users and breaks open the door for all m-payment companies.
This post is the first of six posts in the upcoming Mobile Top-up and M-Payment Adoption in China Series.
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.
Mobile payment ("m-payment") refers to any type of payment transaction initiated through a mobile phone. Another name for mobile payment is "mobile wallet", and indeed it could someday replace cash, debit cards, and credit cards. But even as Internet-based electronic payments have flourished abroad, and even though mobile payment technology has been available for years, m-payment success stories are few and far between.
In China, m-payment is just getting off the ground. On the surface, things look good, with a range of m-payment services available. But cash remains the dominant payment method, and the absence of a widespread m-payment network severely limits user access to these services. We estimate that less than one fourth of China's 500 million mobile users even have access to m-payment services, and less than 2% of all users regularly conduct m-payment transactions.
In this series, we examine why mobile payment has failed to take off in China, and why we believe that mobile top-up - that is, paying one's phone bill through the phone itself - may be the service that ignites China's m-payment industry as a whole.
Some of the key points we will elaborate on are listed below:
- Most consumers show a strong preference for cash payments over electronic alternatives, and many of those willing to try m-payment are turned off by the complicated purchase process and lack of products and services available.
- Many m-payment service providers are spreading themselves thin, trying to offer as wide a range of products and services as possible. We believe that best way to promote m-payment is first to develop a core user base through one service and later worry about broadening one's range of offerings.
- Due to its simplicity of use, huge potential user base, and suitability for on-the-go payment, we see mobile top-up - that is, paying one's phone bill through the phone itself - as the ideal starting point for developing China's m-payment market.
- While mobile top-up has the potential to drive growth in the broader m-payment sector, low per-transaction revenues have kept most mobile payment service providers from making it a focal point in their m-payment offerings.
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