Xiaomi, the 5th largest smartphone maker in the world (in 2015) has just teamed up with China UnionPay to launch its own mobile payment service in China, just after Huawei launched its payment service last month (Huawei Pay).
The company will use its own online marketplace, mi.com, as the first obvious stop for the roll out of the payment service. Xiaomi is planning to launch the new service on its latest flagship Mi 5, which is equipped with the Near Field Communication (NFC) technology needed for mobile payment. The NFC technology allows payment by putting the phone near the sensor of a point of sale machine.
“We will make sure Xiaomi payment has a smooth user experience and we are working closely with UnionPay and several major banks,” said Xiaomi’s founder and chief executive Lei Jun.
Although not many details about the future payment services have been revealed, it is known that UnionPay and Xiaomi are working on the “mobile payment product” based on Xiaomi smartphones for holders of UnionPay bank cards. At the beginning of the year Xiaomi acquired 65 per cent of Jiefu Ruitong, a Chinese internet payment company, to get access to its license required for the online payment business.
“Xiaomi’s advantage is its large number of existing users and the payment service could grow very fast in the beginning, but its long-term growth may not be promising,” stated Alex Ng, an analyst from China Merchant Securities (HK). He added that the smartphone giant will use its payment service to earn service fees from online transactions.