Lei Jun, Founder and CEO of Xiaomi, has officially announced the launch of mobile payment service based on Near Field Communication (NFC) technology called Mi Pay. Currently, the service is available only in China in the beta mode. The next country to get this service is expected to be India and then in the other countries with branches of Chinese banks. One can use credit cards of around 20 banks and debit cards of around 12 banks, folded into the Mi Wallet app. Right now only Mi5 supports this service. The reason why Xiaomi launched this service is because they believe in future, the consumers will consider online payment security and connected devices for buying a smartphone. There might be increased financial incentives for customers buying products from partner stores as the system also works with some loyalty programmes, gifts, and membership cards.
Xiaomi refers to itself as a ‘mobile internet company’ instead of a smartphone manufacturing company because they aim to focus on providing better services. The company believes that these services will be the reason why people would buy smartphones. Xiaomi is known as one of the most valuable startups. The company is just six years old and worth more than $45 billion. However, this will be a tough ride for Xiaomi with major competitors being Apple Pay, Android Pay and Samsung pay. These players already have established and trusted market share. To compete with these giants, Xiaomi will have to stand out in its quality of service and security, as well as in providing convenience and financial incentives to its users.
Growth of the Mobile Wallet Industry
The mobile wallet industry has been growing at a steady pace. It is estimated to reach US$620 billion by the end of 2016 and touch $1 trillion mark by 2019. The most important parameters to attract consumers are security and financial incentives. The service providers must meet consumer expectation – if not beat it as the use of mobile wallets has already surpassed the growth rate of debit and credit cards.
Mobile wallet helps in remittance and financial management purpose as well as banking services at an affordable price. In India, Xiaomi partnered with MobiKwik to provide this service, but now it seems like it won’t be needing the partnership anymore. The news might be a setback for MobiKwik as they will lose the collaboration with a brand like Xiaomi. The Mobile wallets are also a potential threat to companies like Paytm, Freecharge, Mobikwik, Paypal, etc. as the consumers tend to trust the OEMs services over them.
The Allied Market Research has segmented the global mobile wallet market on the basis of its application, mode of payment, stakeholders and geography. The use of mobile wallets depends on the number of consumers using their smartphones as their usual internet gadget, and the growth rate has been tremendous.
According to a TCS report, the mobile wallet market can be driven by:
- Including low-income groups in mobile wallet initiatives,
- Improving its acceptance and,
- Overcoming technology and other challenges.
These measures can ensure mass scaling of mobile wallet usage. If the security is ensured, then the mobile wallet has the potential to achieve greater heights in future. Security is the primary reason why people are still hesitating to adopt the service.
To conclude, we can say that mobile wallet industry has a glittering future if the market drivers are taken good care of it and if they are successful in meeting consumer’s expectations. Winning the trust of the consumers over security is one of the biggest challenges they might have to face. Battling all the challenges, Xiaomi is leaving no stones unturned to meet customer expectations flawlessly; and like every other brand, the Indian market is Xiaomi’s target.