China UnionPay Boosts Mobile Initiative through HTC Partnership

In a significant boost to its mobile payments initiative, China’s fast-growing bank card network, China UnionPay Co. Ltd., has announced that it will introduce the first phone that will allow customers to pay for movie tickets and mobile bills. This announcement helps make mobile in-roads in the world’s most populous country.

CUP formed a partnership with Taiwanese handset maker, HTC Corp., in August to launch a NFC-enabled Android phone with a built-in mobile-payment facility. The new four-inch phone tentatively referred to as the HTC Stunning could launch as early as September in a few select cities, though no mobile operators or banking partners are formally on board.

The smartphone will support various functions, such as credit card payments, booking movie tickets and paying mobile phone subscription fees. The price of the handset has not been announced.

CUP also has embarked on an aggressive program to equip its POS terminals to handle contactless payment. According to CUP, China has almost 400,000 merchant locations with POS terminals that can accept CUP cards, but the company indicates that it could almost double to 700,000 by yearend.

HTC, the world’s fifth-largest smartphone manufacturer, is working with Shanghai F-road Commerce Service Co., a Chinese mobile app developer that tailors apps for financial services, to roll out the new service. HTC bought a US$5.5million stake in F-road in January.

While some smartphones, like Nokia, for example, have included NFC in their handsets for years, others are just now jumping on the trend, thanks in a large part to the number of NFC initiatives happening worldwide, as well as support from all major players, such as banks to mobile carriers to mobile handset makers.

In order to work, phones have to either come equipped with a special NFC chip, like the one found in Samsung’s Nexus S, or they can be made NFC-enabled through the use of stickers or specialized cases. While there have been rumors that HTC might be working on such a phone, this announcement now confirms it. HTC said during the recent announcement that mobile payments are an “indispensable function” for smart phones today.

NFC payments are not just the talk in China, but are gaining a foothold around the world. Japanese citizens already wave their phones at NFC-enabled POS machines to pay for public transportation among other services, while pockets of Europeans and Canadians use mobile payments regularly in their daily lives.

In the US, various companies are vying for dominance in the mobile payment market, including MasterCard Worldwide, Visa Inc., American Express Co., Google Inc. and PayPal Inc. HTC’s mobile payment handset could spearhead China’s mobile payment era, as the mobile phone now becomes part of daily life.