Maverick China Research –
Six Key Issues For Mobile
Payment in China
Presenter: Junelyn Han
July 11, 2008
Maverick China Research
19 Ju'er Hutong #235, Jiaodaokou, Dongcheng District, Beijing 100009
Phone: +86-10-8402-4618, +86-10-6538-3373, Website: www.maverickchina.com

Key Players: Banks
The big 4:
The second tier:
Foreign banks still allowed only limited access to the
market
Maverick China Research © 2008

Key Players: Mobile Operators
Mobile
Fixed-
line
Full-service
Operator restructuring (May 2008) is an attempt to
level the playing field and promote healthy competition,
but China Mobile remains the clear leader.
Maverick China Research © 2008

Key Players: China UnionPay and Third-party
Payment Providers
China UnionPay: Government-supported inter-
bank network
Third Party Providers: Many companies in the mix,
helping connect banks, operators, merchants, and
users.
No clear mobile payment leader at this point
Maverick China Research © 2008

#1: M-payment Potential Based on (Large) Numbers
Large mobile user base = great potential?
600 million mobile subs
Growth: 8 million new subs per month
44% mobile user penetration
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#2: More Than Just a Complimentary Payment
Channel
\"Traditional\" e-payment channels immature
unified bank card network buildout since 2002
only 90+ million credit cards issued
1,500
1,322
1,000
Population (M)
640
Credit Cards (M)
500
301
90
0
China USA
Maverick China Research © 2008

#2: More Than Just a Complimentary Payment Channel
Online payment developing without an
established credit card network
Cash-on-delivery for “e-commerce”
Telephone payments
Direct debit via banks or third-party providers
The demand for safer, more convenient
payment channels is there. Who can build and
deliver a solution for now and for the future?
User habits learning to use various types of e-
payment at the same time
Direct online payment accessed via mobile
Maverick China Research © 2008

#3: Unclear Government Regulations
Unclear regulations for “hot” payment services
stored-valued and virtual currency accounts,
prepaid cash cards, money transfer services
Network standards and sharing plans yet to be
established
no China UnionPay-type network or standards for
mobile payments
Third-party payment licenses stalled
Minimum registered capital
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#4: CUP and CMCC Too Dominant for Industry?
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#4: CUP and CMCC Too Dominant for Industry?
CUP and China Mobile seek to develop new
technologies and services in-house
Lack of competitive urgency to offer new,
innovative services
Payment start-ups left with limited partners in
China
Maverick China Research © 2008

#5: Payment Startups Looking to Fill Market Gap
Funding by private investors
payment companies, VCs
Building the network from scratch
Subsidizing users with low/zero fees
Educating and nurturing change in user
behavior
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#6: M-payment Startups Cannot Build Industry Alone
Investor funding will not last forever
Payment volume essential to profitability, but
building a critical mass of users a tough task
Network standards and connectivity is crucial
to promote adoption from users, merchants
No successful m-payment models to replicate
in China; total uncertainty when it comes to
develop business models and value chain
Maverick China Research © 2008

Thank You!
Junelyn Han
Analyst
junelyn.han@maverickchina.com
+86 10-8402-4618
www.maverickchina.com
www.maverickchina.com/blog
Maverick China Research © 2008