Huawei moves further into mobile payments

FinTech Innovation editors
29 Mar 2016

Apple and Samsung recognize that revenue from the sale of mobile devices, alone, cannot keep shareholders happy.

With the vendors venturing into what is arguably one of the most exciting spaces in the financial services space – payments - it begs the questions of who will follow suit and whether the market can afford multiple payment providers.

Not to be left behind, Chinese mobile phone device manufacturer, Huawei, is accelerating its payments ambition in 2016 with two significant announcements in the first quarter of 2016.

The first is an agreement with Bank of China to jointly co-develop what the two organizations are claiming to be the next mobile based payment system under the Huawei Pay label. This was followed by a separate announcement with China UnionPay, the country’s state-run bank-card processor.

This is not Huawei’s first foray into payment. Unofficially, Huawei Pay debuted in China with the launch of the company’s latest flagship smartphone – the Mate S in December 2015 following a test run of the payment service in September 2015. Using NFC technology, placing the Mate S in close proximity to a China UnionPay POS terminal with Quick Pass function will launch the Huawei Pay service.

Users can complete the transaction via fingerprint authentication. The partnership with UnionPay holds the promise of extending Huawei Pay across China to a broader spectrum of Huawei handset users – mostly smartphones equipped with fingerprint sensors and an NFC chip simply by downloading the Huawei Pay app.

China UnionPay, which holds a monopoly on bank-card payments in the country, also works with Apple Pay, which was launched in China last month.

Local market research firm iResearch estimate that third party mobile payment transactions reached 2.42 trillion yuan in the third quarter of 2015, a 64% jump from Q2 2015. The China Internet Network Information Center estimated mobile payments to have risen to 357 million, up 60% from the previous year.

The Chinese mobile payment market is expected to get very crowded rapidly with other mobile device manufacturers, including Xiaomi, ZTE and Lenovo, rumored to be developing their own mobile payment service. Xiaomi is doing so following its acquisition of a local payment company – Jiefu Ruitong in early 2016.

According to iResearch China’s mobile payment is dominated by Alipay (70%) and WeChat Wallet (19%). To compete in this market Huawei plans to secure the assistance of more banks as part of its smartphone launch strategy. Without releasing details the company said it is designing more payment scenarios for its smartphone users.

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