Mobile payment providers target merchants where cash is no longer king

Offline transactions are shaping up to be the big market in China for mobile phone payment providers such as Union Mobile Pay (UMPay) and SmartPay Jieyin.

While online payment providers such as PayPal and Alipay aim to facilitate internet commerce, the mobile phone payment services firms are targeting bricks-and-mortar merchants that transact much of their business in cash.

The rationale: it is far cheaper to accept payment via a mobile phone than it is to collect paper money.

UMPay managing director Zhang Bin said the company offered payments for 50 types of services and hoped to expand its merchant relations through a partnership with Tom Online, announced last week.

'There are a number of services: phone bills and pre-paid card top-up. You can also buy lottery tickets. This is quite an interesting application - it's everybody's hobby in China. Also, some people buy travel insurance and business users buy air tickets via mobile phone,' Mr Zhang said.

SmartPay chief financial officer Derek Sulger said in an earlier interview with the South China Morning Post that collecting cash was an inconvenience for consumers and merchants.

'We tend to focus on payments that are extremely awkward to process. For example, paying your phone bill might sound very simple,' Mr Sulger said.