China’s mobile payment market recorded $199 Billion in transactions in 2013, according to Beijing-based firm iResearch. On 15th April 2014, China's largest Internet search company, Baidu, launched its mobile payment solution - Baidu Wallet. The wallet enables Beiging based companies to deliver closed loop transactions. This move will help build a better ecosystem while going mobile, according to the company.
"Users' needs online are changing from searching for information to searching for services," said Li Mingyuan, VP of Baidu. "It is high time for us to meet the needs and offer them one-stop services in the mobile Internet era," he added.
- By embedding payment functions into its mobile applications, Baidu Wallet allows tenables closed loop transactions
- Initially, Baidu will embed the payment solution into its own apps - like group-buying and mapping.
- It will also be integrated into the new version of mobile Baidu, a search app that is expected to be launched later this month.
- Deposits in Baidu Wallet, the wealth management service run by China’s leading search engine and web portal, reached its investment limit of one Billion yuan ($163.23 Million) in less than five hours after its launch back in March.
Baidu as well as other Chinese internet companies like Alibaba Group Holding Ltd and Tencent Holdings Ltd have offered wealth management products since 2013. They have attracted millions of investors thanks to interest rates on consumer deposits that are higher than those offered by banks, which are subject to a cap of 3.3 percent for one-year savings. Despite Alibaba's and Tencent's greater experience in the mobile payment sector, it doesn't mean that Baidu cannot carve out a share of the market, according to Wang Weidong, an analyst at iResearch Group.
On March 14th 2014, China’s central bank demanded that payments made by scanning a bar code with smartphones be suspended temporarily. This move struck the payment arms of Internet companies Tencent and Alibaba Group Holding pretty badly. The bank cited concerns over the security of their verification procedures.
The move also comes barely two days after Alibaba and Tencent launched virtual credit cards. Following the notice from People’s Bank of China, the central Bank ordered the suspension of the virtual cards as well as smart phone payments that utilized Bar code technology and symbols. “The level of risk control directly impacts the users’ information security and financial security,” the central bank said in the notice.