By
Chimamanda U. Martha
December 28th, 2023
The smartphone giant Xiaomi has a large number of existing users so the payment service is expected to grow rather fast.
Chinese giant Xiaomi, that turned out to become the 5th largest smartphone maker in the world last year, has just teamed up with China UnionPay to launch its own mobile payment service on the Chinese mainland. So far, the three best-known mobile payment services included Apple Pay, Samsung Pay and Android Pay. Besides, Huawei launched its payment service, Huawei Pay, just last month.
Xiaomi Pay will enable the smartphone manufacturer to fulfil more functions as an internet services company with a vast smartphone customer base. The company will use its own online marketplace, mi.com, as the first obvious stop for the roll out of the payment service. Company’s management doesn’t reveal the launch date of Xiaomi Pay but the service might be officially announced very soon.
“We will make sure Xiaomi payment has a smooth user experience and we are working closely with UnionPay and several major banks,” said Xiaomi’s founder and chief executive Lei Jun.
Although not many details about the future payment services have been revealed, it is known that UnionPay and Xiaomi are working on the “mobile payment product” based on Xiaomi smartphones for holders of UnionPay bank cards.
At the beginning of the year Xiaomi acquired 65 per cent of Jiefu Ruitong, a Chinese internet payment company, to get access to its license required for the online payment business. Xiaomi is planning to launch the new service on its latest flagship Mi 5, which is equipped with the Near Field Communication (NFC) technology needed for mobile payment. The NFC technology allows payment by putting the phone near the sensor of a point of sale machine.
“Xiaomi’s advantage is its large number of existing users and the payment service could grow very fast in the beginning, but its long-term growth may not be promising,” stated Alex Ng, an analyst from China Merchant Securities (HK). He added that the smartphone giant will use its payment service to earn service fees from online transactions.
As for now, the most popular online payment services in China are Alipay, which fulfilled more than 47 per cent of all online transactions last year, and Tenpay with 20 per cent share. Tay Xiaohan, an analyst from technology research firm IDC, explains: “Most retailers already offer payment services by Alipay and Tencent, and users may not see the need for mobile payment services by the other vendors.”
In February Apple Pay also launched its services in China. The customers got opportunity to use Apple Pay with cards from 19 banks and several merchants, including KFC, Carrefour, 7-Eleven and McDonald’s. Industrial and Commercial Bank of China Ltd has recently announced it will also add Apple Pay support.
“We think China could be our largest Apple Pay market,” said Jennifer Bailey, vice president of Apple Pay. Indeed, China has the largest smartphone market in the world. Moreover, it is the Apple’s second biggest market in terms of profits. In the last fiscal quarter, the sales in the country increased to $12.5 billion.