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Last updated: September 13, 2005 4:07 pm

UMPay,Tom Online form alliance

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Union Mobile Pay, the wireless payment company part-owned by China’s biggest mobile telephone operator, on Tuesday unveiled an alliance with Chinese internet portal Tom Online.

For UMPay, backed by operator China Mobile and leading bank payment network China Union Pay, the tie-up would help it further boost growth of its already fast-expanding user base.

UMPay allows China Mobile subscribers with who have a Chinese debit or credit card to make instant payments of up to Rmb3,000 ($370) through their mobile phone.

The company is one of a number of ventures competing to become the online and wireless payment method of choice in a market where direct credit card use is still relatively rare.

Tom Online, which claims to have 70m users, said the pact would help promote sales through its online shopping mall, which sells products such as video discs featuring popular singers.

Many small payments for online services are already made directly through the billing system of China Mobile, which has more than 230m subscribers. However, the relatively large purchases that can be made via services such as UMPay should help encourage the development of the e-commerce sector.

“We want to work closely with Tom Online to convert some of their 70m users to be wireless payment users,” said Zhang Bin, UMPay general manager. 

Mr Zhang said the number of UMPay registered users was expected to grow from 1m in 2004 to 4m by the end of this year – and to double again in 2005.

Commission from transactions made through Tom Online and settled by UMPay would be divided between the two companies, they said. Commission ranges from about around 0.5 per cent to as high as 25 per cent for some purchases of online digital content.

Mobile telephone operators’ national networks and sophisticated billing and customer management systems make them strong contenders to offer non-cash payment services.

UMPay currently works through the use of text messages to arrange and confirm payment.

HoweverSome international counterparts are using more high-tech approaches. NTT DoCoMo, Japan’s largest mobile phone group, already allows users to settle transactions in shops or train stations with a mere wave of a mobile phone handset equipped with a radio smart card.

Mr Zhang said UMPay had no immediate plans to work with other Chinese online companies, but said it was talking about providing a deposit-collection service for local TV shopping networks. which often suffered losses when customers who ordered goods refused to pay for them on delivery.

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