A new mobile wallet has hit the market

Mar 25, 2016

Another mobile wallet has hit the market.

Huawei, the Chinese mobile phone manufacturer, has partnered with UnionPay, China's state-run card network, to launch Huawei Pay, the company's own mobile wallet, according to the Wall Street Journal.

The payment app, originally piloted in September, uses biometrics and NFC technology to make in-store payments through Huawei phones.

The partnership with UnionPay will give Huawei Pay a new level of reach in China, where UnionPay has a near monopoly on cards. Huawei Pay only worked at select merchants in the pilot phase, but now it can function in so many more locations in the world's most populous nation.

One roadblock, however, is that Huawei Pay will not work on all Huawei phones because it requires both fingerprint scanning and NFC tech, which not all of these devices have. Huawei expects to have this technology on more of its phones in the future.

Huawei Pay could draw in a large user base, as the company had a 15.5% share of the smartphone market in China as of Q4 2015.

Furthermore, smartphone vendors have been moving into China's active mobile payments market. Apple Pay launched in China in February and has seen much early success, while Samsung Pay is expected to debut in China in the next few months.

But these newer mobile wallets will face tough competition from established players. Alipay, the platform affiliated with Alibaba, has 400 million active users and nearly half of the third-party mobile payments market in China in Q3 2015, according to iResearch.

WeChat, the mobile messaging app that allows peer-to-peer transfers and other mobile commerce payments, has nearly 700 million users. Tenpay, which powers payments inside WeChat, has 20% of the market and is on track to process $556 billion in P2P payments in 2016.

This increase in competition could eat into Alipay's and Tenpay's share somewhat, as Apple Pay, Samsung Pay, and Huawei Pay all have strong brands that could attract users. But it remains to be seen if they can truly put a dent in the dominance that Alipay and Tenpay have had for so long.

The future of payments is rapidly changing as mobile wallets continue to gain popularity. One need look no further than the competition raging in China as evidence of this transformation.

More at BI Intelligence "Payments Industry Insider"