China Unicom dials up pay by phone market

China Unicom, the country's second largest telecom carrier by market value, is expected to officially launch its cell phone-based payment service soon.

The plan will initially kick off in four cities including Beijing, Shanghai, Guangzhou and Chongqing starting next month, prior to a nationwide roll out, the Chinese-language Legal Mirror newspaper reported Monday citing unnamed resources from the operator's product innovation department. China Unicom spokesperson Wen Baoqiu would not confirm the report Monday.

The service necessitates users have two telecom operator accounts: one for basic phone services and the other for making phone-based payments. Mobile payment accounts can hold a maximum 1,000 yuan ($150.49) credit for purchases and can be recharged, according to the report.

Access to the mobile-payment services will require either a phone that is customized for payment usage or a new subscriber identity module (SIM) card designed to access services. Small denomination purchases can be made by swiping phones on a special point of sale machine at retail outlets.

The handset payment market has great potential in China, said Hu Yuanyuan, an analyst with iResearch Consulting Group, a Beijing-based Internet research firm.

By 2013, the number of China's mobile subscribers is expected to reach 996 million, with mobile pay-ment subscribers amounting to 410 million, iResearch estimated early this year. But Hu expressed concern that growth may stagnate due to the lack of a universal payment standard.

Telecom operators, banks and the third-party-payment enterprises all want to capitalize on the market, making enhanced penetration rates difficult, Hu pointed out.

Public acceptance of paying by phone is also still a long way off, she added.

By Li Qiaoyi

Source: Global Times