Mobile payment to be increasingly accepted
By Wu Jiao and Liu Baijia (China Daily)
Updated: 2005-08-16 08:50

Mobile payment will become a fast and convenient way to pay for products and services in the future, even for cars, leading to an increasing amount of capital for SmartPay, the Shanghai-based mobile payment business.

US private equity company RRE Ventures has invested millions of US dollars into the Chinese firm, SmartPay Jieyin Ltd said yesterday.

Derek Sulger, chief financial officer and executive director of SmartPay, declined to reveal how much RRE injected into his firm, but said the investment from SmartPay's third round of fund-raising accounted for the majority of the US$20 million funds that his company raised.

RRE contributed half of the capital in this round, while existing shareholders Accel Partners, Icon Ventures Asia and Lunar Group, contributed the other half.

The capital will be used for recruiting more hands, geographical expansion, and strategic acquisitions.

SmartPay connects bank accounts with mobile phones to allow phone users to pay for products and services, such as phone, gas and electricity bills or even cars.

Payment has been an obstacle to the development of e-commerce in China because only a small number of Chinese people use credit cards or cheques.

According to the Chinese Internet Network Information Centre, almost three-quarters of Chinese netizens shopped less than five times on the Internet in the first half of this year, and more than a half of them paid with traditional means like postal remittance and payment after delivery. Mobile payment only accounted for 0.3 per cent of all transactions.

With the popularity of mobile short messaging services and the increase of payment applications, mobile payment will be increasingly accepted by consumers, according to an online payment report in June, by the domestic consulting firm Pday Research.

Pday said there are six major players in the market, but the size of the market is too small and customers need more awareness.

Beijing-based Yeepay also received an undisclosed amount of venture capital from some Silicon Valley firms in the first quarter.

Greg Shen, chief executive officer of SmartPay, said his company now only operated in 10 Chinese regions with about 300,000 users.

However, Sulger believed his company would be able to develop 40 million customers by the end of next year with aggressive partnerships with mobile operators, banks and merchants.

The firm aims to open services in another 10 Chinese cities within 2005, and meet the requirement of an overseas initial public offering by the end of 2006.

In another development, Intel Capital China Technology Fund also said yesterday that it had invested in three Chinese technology companies: Shenzhen-based integrated circuit (IC) design company Chipsbank Microelectronics Co Ltd, Shanghai-based digital TV solution provider Onewave Technologoes Inc, and a Shanghai-based IC design foundry VeriSilicon Holdings Co, with the amounts of the investments undisclosed.

The technology fund under the US microprocessor giant was just launched in June with a figure of US$200 million, focused on the Chinese market, in efforts to help the growth of small and medium Chinese technology companies in line with Intel's strategies.

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