China part 2: Perspectives – Mobile payments

 A person can make money, but money can’t make a person

Country Singer Dolly Parton.

This shall be the introduction on the focus if this post: Mobile payments in China.

I already mentioned in my last topic that I will go on writing about China and I do not want to just list up all possible economic perspectives of the future, so I concentrated on one. But before I take the close look on China I would like to take a look at just some of the basics of mobile payments in general to make it easier to get into the topic.

Why mobile payments?

Stephen Pritchard, via itpro.co.uk said:

Mobile payments, and payments via microchips, could oust card payments and even cash within the next decade.

Mobile payments are likely to become the common method of paying within the next decade and of course also smart phones have become more and more popular with good reason.

For this I found some useful information on the MasterCard website in an article which was published in May.

MasterCard Worldwide has developed the MPRI, this stands for Mobile Payments Readiness Index. By using this, their target group of the analysis were 34 countries and their possible adoption of three different types of mobile payments. These were person to person, mobile web commerce and mobile contactless payments at the point of sale. The result was that markets are never the same in all the different countries and that the so-calles “readiness” is the crucial factor to success in the development of mobile payments all over the world.

Another result was that Canada, Kenya, Singapore, South Korea and the United States are the countries which are most ready to adopt the new technologies of mobile payments.

Especially young and affluent people are likely to adapt in a fast way to the new technologies, but most of them were male. But there were also countries were females showed a more interest in mobile payments like for example China, Egypt and the Philippines.

Technology infrastructure, a responsive regulatory environment and a robust economy are table stakes for the advancement of mobile payments. The necessary conditions are consumer readiness and industry integration. As no one entity can develop and promote mobile payments by itself, key players in the ecosystem must work together to collectively advance the cause of mobile payments.

I included these words of Theodore Iacobuzio, vice president of Global Insights, MasterCard Worldwide, because I think they are very suitable and they give the key facts of what I wrote about in my text above.

I was wondering a little bit why Kenya (and not any other African country) was listed among the five I mentioned above. For this I found out that people who are living in developing countries are usually drawn to mobile payments for access to “the larger economy” in national and international sense and another incentive is to foster a better economic infrastructure.

If you are interested in taking a closer look at the MPRI with useful data, you can visit this website here:

http://mobilereadiness.mastercard.com.


China and its perspectives in telecommunication and mobile payments

Now I want to come back to China as you already noticed in the subhead.

For this I read an interesting article at chinadaily.com by Meng Fanbin.

According to a survey by Pew Internet, it could be possible that mobile payments become the new common form of paying until 2020. The results were that 65 % of the target group said that a lot of people will be using smartphone terminals as a method of paying by 2020.

Further 33% said that cash and bank cards as the common methods will not be replaced by mobile payments.

Zhang Xudong, iResearch, said:

Mobile payments may become the main method in the Chinese first-tier cities in three to five years. The security problem has already been resolved, and the key factor that hinders the development of mobile payment nowadays is convenience, including the configuration of related equipment and developing mobile payment habits among customers. It will take a time to build a cross-industry system and balance the benefits of all parties.

The website wantchinatimes.com revealed that possible obstacles of the adoption of mobile payments are the large spectrum of devices which are used by Chinese people and that there is also a struggle between the bank card provider UnionPay and mobile carriers.

For more information about this, you may take a look here:

http://www.mobilepaymentchina.com/mobilepayment/

http://www.wantchinatimes.com/news-subclass-cnt.aspx?id=20120610000039&cid=1202

http://www.zong.com/countries/mobile-payments-china

http://chinapaymentservices.com/payment-services/mobile-payments-china

My opinion on mobile payments

Although I am not in possession of a smart phone yet, but nevertheless I see many advantages in this form of payment. The first benefit is that you are flexible considering the location of the payment. You can just use your smart phone wherever you are and complete your transactions, although it is still a bit strange to imagine that my mobile phone will replace my purse in some years.  I suppose that it is possible to evolve technologies which are safe enough to gain so much confidence that it could become a really popular method of paying as there are already many carriers who offer this technology, but I do not think that cash in form of coins and notes will disappear completely. For some people the safety of data is a serious issue in this case, because especially in financial tools customers are usually relatively sensitive with good reason.

This is all for the post for this week and the next one about China will follow next week.

Feel free to state your opinion about the topic:

What do you think about mobile payments?

What advantages and/ or disadvantages do you see?

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3 responses to “China part 2: Perspectives – Mobile payments

  1. Johanna,
    Well said. I loved to see your post on mobile payments especially after Simona and I just did a chain of posts on our blog! For now, I am sure that NFC and mobile payments will be the next form of payment in the near future considering the 2015 deadline by the US.

    China is a huge market and if mobile payments really do catch on there, there would be a lot of income opportunities available. Are there any specific problems that you came across or you forsee with China implementing mobile payments?

  2. Hi JanaStraub,
    wow, I never thought about China in connection with mobile payments. Really nice idea to think about.
    To state my opinion first, I think that mobile payment is a good thing to facilitate payments. Everybody has his phone when he/she goes out, so no need to carry cash bills or coins you can easily loose.
    Furthermore, paying will be much faster using this new technology.
    However, I am personally afraid of using this method, because I believe that you can very fast and easily loose control over your expenditures, which could lead to debts. That is my major reason why I do not use any credit or debit cards to pay in the supermarket.

    Now about your post: As I said above, a cool connection you made there. You used many quotes and provided many links for the reader to inform himself further. I also liked your subheadings structuring you posts and the discussion at the bottom.
    What I found somehow distracting were the pictures in the text. Normally this is no problem, but because the picture is capturing so much space of the text, it influences the readability, as far as I see.
    And again, I am really interested in the technical field. Do you have any information how this whole process of mobile payment works?
    Something about an app or linking your mobile phone to your account via internet etc? Would be really interested in that…

  3. Hi Johanna!
    Do you know what I always like about your great pieces of work like this? You always introduce your plan, you tell the reader right at the beginning what you will write about. This gives me a hint if I might be interested in your post or not 😉 This time, I obviously am interested!

    As I am a passionate smartphone user I am pro mobile payments for those who really want to use this new technology. Nevertheless, countries or economies that are not able to participate in this mobile payments movement shouldn’t be excluded or have disadvantages.

    In your post, I read that mostly male show interest in mobile payments in contrast to women. Do you know why? This is something I would really like to know as I am not sure about possible reasons.

    Anyhow, thank you for keeping me updated on current and international issues;)

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