Xiaomi makes plans to move further into financial services
Xiaomi plans to launch a mobile payments service in China in 2H16, going head to head with Alibaba’s Alipay and Tencent’s WeChat Pay which have a combined 90% market share. The news is the latest in a series of moves the smartphone maker has made into financial services. Most recently, Xiaomi announced plans to embed Indian e-wallet MobiKwik into its operating system and acquired a 29.5% stake in Sichuan Hope Bank. Last year it invested around $15.6m in Tiger Brokers, a digital brokerage. 

Xiaomi Planning a New Mobile Payments Service for China

July 11, 2016 By: Steven Anderson

The mobile payments market the world over is fairly well stuffed with alternatives, giving users more options to get in than ever before.

One more option will be making its way to the Chinese market, which in itself is something of a surprise.

Perhaps more surprising is the revelation that it’s smartphone maker Xiaomi planning to get in on the action, and it will be ready to go within the second half of this year.

The Chinese mobile payments market itself is an unusual field, and Xiaomi’s entrance into that field isn’t likely to be easy.

Right now, reports note, 90 percent of the market is consolidated in the hands of two interests: Alibaba’s Alipay and Tencent’s WeChat Pay.

Most of the major smartphone makers in the region—Samsung and Huawei included—support Alipay. Xiaomi, meanwhile, does not, and rather than support another service, it’s instead planning to bring out its own.

That’s a move that Xiaomi has actually echoed elsewhere in the region.

Xiaomi India has previously made moves to connect with the MobiKwik mobile payments service, a move which should give it a way to connect mobile payments with Xiaomi devices in India.

MobiKwik’s chief operations officer Mrinal Sinha called it a “…leap in giving users seamless recharge and payments experience.”

Essentially, Xiaomi seems to be banking on the notion that it can build its own mobile payment system within its own ecosystem, and get people to stick with the payment platform that already comes on the phone.

That’s not a bad idea—it’s certainly done well for Apple Pay, and spawned imitators like Samsung Pay and LG Pay—but the problem is that inertia may well already be on the competition’s side.

Users are already neck deep in Alipay and WeChat Pay, so where’s the incentive to change? Sure, new Xiaomi phone buyers may make the move since it’s right there anyway, but there’s just as much incentive to keep all the old logins and such and return to whatever platform was previously used.

Xiaomi has a decent idea here, but it’s going to need to make its users an offer they collectively can’t refuse in order to get much traction.

Its expansion into other regions will also likely help, but this may not go very far without some extra incentive.