China is developing its first national single mobile payment platform. It's been created to lift domestic information consumption and boost economic growth, and could replace cash, credit and debit cards.
The system has been undergoing trials since the end of last year, China Daily reports.
Very few countries possess an operating national payment platform, Colin Light, China Digital Consulting Leader for PricewaterhouseCoopers in Hong Kong told China Daily. China’s mobile platform based on Near Field Communication technology (NFC) has a bright future and potentially could abolish cash and plastic cards.
The platform enables communication between financial institutions that provide mobile payments, and mobile network operators, People's Bank of China Deputy Governor Li Dongrong revealed in an interview on Monday.
Li said 21st century mobile finance is undergoing a standardization process to integrate mobile payment providers into a single system. The NFC-platform “provides a solid infrastructure foundation to help China boost domestic information consumption and make the sector a new driver for economic growth.”
Mobile payment arms of China’s leading financial organizations, including China Construction Bank Corp, China CITIC Bank Corp Ltd, China Everbright Bank Co Ltd, China UnionPay have been connected to the country’s largest telecom operator China Mobile.
"The biggest obstacle for banks and mobile operators to operate in a unified way is to build scale. You need a scale advantage to reach wide acceptance of payments," said Light.
Wang Weidong, an analyst with iResearch Group, said that despite heavy support from the People's Bank of China, the NFC-based payments so far cannot compete with other internet payment systems simply because “there are not many NFC-enabled smartphones in China”.
“To promote proximity payment, you need people to buy mobile devices that are tailor-made to use this technology,” Wang said, adding that it would imply changing the habits of people who use traditional forms of payment.
NFC technology enables users to make quick payment by tapping a NFC-equipped device, such as smartphone, on a special terminal at checkout.
So far the volume of payments done in this way in China is quite small, only 0.8 percent, which could be explained by the small number of NFC-terminals, said the iResearch Group. In 2013 third-party mobile payment transaction surged 700 percent to reach $197 billion.