New app for mobile payments

Under the guidance of China's central bank, China UnionPay has launched a mobile payment application jointly with more than 30 commercial banks, in an effort to enhance competition with mobile payment giants such as Alipay and Tenpay.

With a unified mobile payment gateway, Cloud Quick Pass, a mobile payment app led by the national bankcard association China UnionPay, will become the third-largest Chinese mobile payment platform, following the two major third-party payment service providers.

"It's a product innovation made by UnionPay to tackle intensified competition with Alipay and Tenpay," said Zhao Yao, a contract research fellow of the Institute of Finance and Banking at the Chinese Academy of Social Sciences.

"The launch of Cloud Quick Pass will enrich consumers' choice of payment, reduce market concentration, and increase market vitality through competition."

As each participant in the new mobile payment platform has its own interests, the value of the platform lies in how UnionPay will coordinate the interests of multiple commercial banks and the bankcard association itself, Zhao said.

"How to integrate the interests of multiple participants and achieve a common goal with concerted efforts is a big challenge. It requires UnionPay to design a detailed and sophisticated system."

In the short term, the new mobile payment application will not have a substantial impact on Alipay and Tenpay, which have dominated China's mobile payment market, but will reduce market concentration, he said.

The market volume of third-party mobile payment increased by 95.4 percent year-on-year to 27.1 trillion yuan ($4.1 trillion) in the second quarter of 2017, according to a report issued by the Beijing-based iResearch Consulting Group in October.

Around 54.5 percent of the market share was taken by Alipay, 39.8 percent by Tenpay, and the remainder by other third-party payment service providers including China UnionPay Merchant Services Co Ltd, a subsidiary of UnionPay, the report said.

Using technology such as big data and artificial intelligence, Cloud Quick Pass will integrate the payment service instruments currently scattered among various banking institutions into a unified mobile payment entry, providing services including credit card application, near-field communication based mobile payment, quick response code payment, and money transfer.

The application currently covers the railway network, 100,000 supermarkets and convenience stores, more than 30 universities and colleges, over 100 food markets, and public services such as water, electricity and gas, in more than 300 cities.

Its next step will be to expand into other business scenarios, including payment of traffic fines and public transportation services, according to UnionPay.