Date
25 April 2018

Telcos, internet giants in mobile payments war

China’s state-owned telecom giants have taken up the gauntlet thrown down by the big internet players in the emerging field of on-the-go payments business.

And this time, it seems that the Big Three — China Mobile (00941.HK, CHL.US), China Unicom (00762.HK, CHU.US), and China Telecom (00728.HK, CHA.US) — are determined not to commit the same mistake as they did in the face of the mobile social networking surge.

Their potential niche is the near-field communication (NFC) technology, a form of contactless payment transaction based on close proximity radio communication. The trio is now sparing no effort to promote NFC-enabled phones and SIM cards to woo patrons.

A senior China Unicom executive has said that all of the company’s branded cellphones priced 2,000 yuan (US$327) or above would support the NFC payment service. After last year’s trial application in Shanghai, Unicom will soon provide the service in Beijing, Guangdong, Zhejiang, Jiangsu and Fujian, with nationwide launch scheduled by the end of the year, China Securities Journal reports.

China Mobile has reportedly set this year’s target for NFC device sales at 10 million units and allied with China Unionpay, the nation’s sole operator of electronic funds transfer at point of sale (EFTPOS) network, for pilot application in 14 key cities.

China Telecom, meanwhile, ordered 500,000 NFC-enabled SIM cards in August.

But internet giants like Alibaba and Tencent (00700.HK) are muscling in too.

Alibaba’s Alipay, the country’s most popular online transaction tool with a registered user base of 800 million, is said to be preparing to launch a novel acoustic wave-based mobile payment service that will allow Alipay users to buy things at automatic vending machines even if their phones are offline.

Tencent is also well poised to monetize its massively popular instant communication tool WeChat. Payment service through quick-response (QR) code-supported technology that is embedded in WeChat is a likely scenario.

The telco trio’s bet on NFC technology is all well and good, but they have to convince users that their offering is superior and therefore worth the trouble of getting a new NFC phone or SIM card.

Another obstacle is the upgrading of existing POS machines. Media reports suggest that telcos, banks and POS operators are yet to reach a consensus on how to share the expenses.

– Contact the writer at [email protected]

RC

EJ Insight writer

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