After making a mark in the smartphone market, Xiaomi is now looking forward to making an impact in the mobile wallet space. Xiaomi began testing an online money market fund service. It is currently in its beta phase, and will allow users to earn interest on money that they save in Xiaomi’s exclusive mobile wallet app. Users can earn interest at a rate of 3.058 percent, as reported by Re/code. Xiaomi is looking forward to being more than just a smartphone maker.
Xiaomi has already partnered with some financial institutions to run the mobile wallet as a service to its customers. Alibaba, China’s e-commerce giant, also offers an online fund management service, which was launched back in 2013, called Yu’e Bao. However, Yu’e Bao has faced scrutiny due to federal regulations. China already has a highly mature mobile payments market. Last year, China’s payment providers processed more than $960 billion worth of transactions, according to iResearch.
In the Chinese market itself, Xiaomi will face stiff competition from mobile wallet services like Alibaba’s Alipay and Tencent’s Tenpay. Tenpay has more than 438 million active users. Being one of China’s largest domestic brands, Xiaomi certainly feels confident to face these challengers. Moreover, it is offering a unique characteristic in its service by providing a mobile wallet that will give you returns in terms of interest earned.
An interesting aspect to be noted here is that the world’s leading smartphone brands seem highly focused on enabling mobile payment services as well. Recently, at the Mobile World Congress, Samsung released its mobile wallet service called Samsung Pay. Samsung Pay uses NFC as well as MST (magnetic secure transmission) to initiate payments at point-of-sale. When considering payments services by mobile manufacturers, Apple Pay is an example that cannot be overlooked. With its expanding base of backers, Apple Pay has made itself available at more than 700,000 locations, including more than 2500 banking locations.
Xiaomi has certainly been investing significantly to provide value added services to its current successful mobile platform. Xiaomi has not expressed any desire to enter into core financial services like banking. Tencent has already bought China’s first online-only bank, WeBank.
The value of commerce transactions conducted via mobile handsets/tablets will exceed $120 Billion USD by 2017, with 150 Million users. China will exceed $1 trillion in retail e-commerce sales by 2018, accounting for more than 40% of the worldwide total. Xiaomi is considering this as an opportunity to drive further m-commerce transactions through its mobile wallet offering. Xiaomi had sold more than 26 million phones in the first half of 2014. With its current base of customers, Xiaomi certainly has the power to pose a meaningful threat to existing players.