IPS - In the Money Through a Merchant Focus

IPS is one of China’s oldest third-party payment providers, and through their online payment platform, is one of the few Chinese payment providers making a profit. To date, they have been successful where others have failed by focusing on merchant-targeted online payment solutions. IPS has been able to make money in spite of a very small registered user base of only 1.5 million. In this report, we dissect how IPS, already 7 years in the industry, has been successful so far and whether or not their strategy is suitable for future growth in China's payment industry.

Key Findings

• IPS focuses on accumulating merchant partners and not individual users for its online payment platform.
• IPS is one of the few Chinese payment providers with positive cashflow, putting them in position to grow their business rather than start up a business.
• Strong and aggressive sales and marketing teams, have led to high exposure in local conferences, events, and the press.
• IPS leverages funding and technology from its Hong Kong-listed parent, Universal Technologies Holdings.

Figures

Figure 1: Credit cards issued in China and in the US (M)
Figure 2: Internet Users in China, 2001-2006 (M)
Figure 3: Mobile Subscribers in China, 2002-2010F (M)
Figure 4: China government groups involved in third-party payment regulation
Figure 5: Universal Technology Holdings Company Structure
Figure 6: IPS Management team
Figure 7: IPS Annual Transaction Volume, 2001-3Q2007 (RMB M)
Figure 8: IPS Annual Number of Transactions, 2003-2006 (M)
Figure 9: IPS Average Transaction Size (RMB)
Figure 10: IPS Fee Structure for Merchant Partners
Figure 11: IPS Operation Model
Figure 12: IPS Payment Service Coverage by Channel
Figure 13: IPS logo
Figure 14: IPS Bank Partners
Figure 15: Select IPS Merchant Partners

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