Xiaomi battles rival on mobile payments

A staff member of China's mobile company Xiaomi poses with its new model Mi Max at its launching ceremony in Beijing, May 10, 2016. [Photo / Agencies]

Xiaomi Corp will soon become the first Chinese smartphone vendor to add a mobile payment service to its handsets, pitting itself against foreign rivals Apple Inc and Samsung Electronics Co, which have already launched similar services.

The Beijing-based company said on its official microblog on Tuesday that it will launch MI Pay on Thursday by partnering with China's No 1 bank card association, China UnionPay.

Using near-field-communication or NFC technology, MI Pay will allow consumers to pay bills simply by holding their smartphones near point-of-sale terminals. It can be linked to credit cards and debit cards from 10 banks, the company said.

With MI Pay, consumers can also use smartphones as transportation cards to take buses and subways. A Xiaomi employee familiar with the matter told China Daily that the transportation service is already ready in Shenzhen and Shanghai and under tests in other four cities.

The move came as smartphones look and operate largely the same and players are looking to offer more diversified services to differentiate their products. Xiaomi's largest domestic rival Huawei Technologies Co Ltd also said last month that it would soon launch similar payment services.

A man uses a mobile phone in front of the logo of Xiaomi in Beijing. [Photo / Agencies]

Li Chao, an analyst at research firm iResearch Consulting Group, said China's mobile payment market is dominated by internet heavyweights Alibaba Group Holding Ltd and Tencent Holdings Ltd.

"NFC-enabled payment services are still quite new in China because local consumers have been using Alipay and Tenpay (mobile payment applications developed by Alibaba and Tencent) for a long time," he said.

Alipay and Tenpay enable consumers to pay bills by scanning codes with smartphones.

"It is quite difficult to change consumers' preferences and user habits," Li said.

In February, Apple launched NFC-enabled Apple Pay on the Chinese mainland. Later, Samsung also made a similar move. But so far, the two firms have only gained a limited presence in the payment sector, according to Jin Di, an analyst at research firm International Data Corp China.

The move also came as Xiaomi struggles with declining shipments amid mounting competition from rivals and a slowing smartphone market.

Wang Liming, a 25-year-old programmer in Beijing, said: "I take the subway to my workplace every day. The application of MI Pay in the transportation sector is quite appealing, but not enough to persuade me to buy a Xiaomi smartphone."