China could see more than $8 billion in mobile payments by 2014, according to ABI Research forecasts.
The Near Field Communication (NFC) market is moving forward on an uneven front. Google is aggressively supporting the technology through the latest generation of Android handsets from its partners such as Samsung. Nokia is introducing NFC-capable handsets, but the C7 and N9 only support non-secure applications and not contactless payment.
In China, however, device manufacturers and operators are keen to move ahead with contactless mobile payment. It will be interesting to see how ZTE, as a local OEM, implements its announced range of NFC smartphones and handsets.
Jake Saunders, VP for forecasting at ABI Research notes, “China is a big mobile payments market to play for. There were more than 868 million cellular subscribers as of the end of March 2011.”
China’s mobile payments industry is burgeoning, attracting many participants wishing to grab first-mover advantage and vie for a bigger slice of the pie. ABI Research estimates that NFC payment transaction values in China could surpass $8 billion by 2014. Financial institutions (China UnionPay), third party mobile payment service providers, and Mobile Network Operators (China Mobile, China Unicom and China Telecom) are all jostling for position. According to Saunders, “ABI Research believes the mobile payment market in China will largely adopt an MNO-led business model.”
The Chinese government has expressed a preference for an NFC device solution utilizing the 13.56 MHz frequency band. To break the classic chicken-and-egg cycle, there are bridging solutions intended to stimulate the contactless payment market. The principal one is contactless (NFC) SIM cards. WatchData’s SIMpass solution has attracted strong interest from all three operators.
As a result, more NFC handset add–ons are shipped than NFC-enabled mobile handsets: 2.5 million SIMpass add-ons and 50,000 SD add-ons, versus 45,000 handsets in 2010.
ABI Research’s “Mobile Payments in China” study (http://www.abiresearch.com/research/1007613), produced by the firm's Singapore division, provides an overview of the contactless mobile payments ecosystem in China. It also explores the near-term regulatory directives and the payment technology competition among the key players, and points out the potential winners and losers.