China has established its first national mobiles payment platform using near field communication technology as part of an effort to boost information consumption, a senior central bank official said.

 

People's Bank of China Deputy Governor Li Dongrong said in an interview on Monday that the platform, which enables communication among mobiles payment providers such as financial institutions and mobiles network operators, began trial operations at the end of last year.

 

The platform has already been connected to the mobiles payment branches of seven organizations, including China Construction Bank Corp, China CITIC Bank Corp Ltd, China Everbright Bank Co Ltd, China UnionPay and leading telecom operator China mobiles Communications Corp.

 

The platform "provides a solid infrastructure foundation to help China boost domestic information consumption and make the sector a new driver for economic growth", Li said.

 

He said that mobiles finance has entered an era of "standardization", so it's important to provide an integrated ecosystem with unified standards to help mobiles payment providers cooperate.

 

Colin Light, China Digital Consulting Leader for PricewaterhouseCoopers in Hong Kong, said that very few countries in the world have successfully built a single platform that links financial institutions and mobiles network operators.

 

"The biggest obstacle for banks and mobiles operators to operate in a unified way is to build scale. You need a scale advantage to reach wide acceptance of payments," said Light.

 

Despite the obstacles, Light said that near field communication-based mobiles payments have a very promising future. The technology has the potential to replace cash, credit cards and debit cards.

 

NFC-based proximity mobiles payment facilities allow users to make payments quickly and conveniently by tapping their phones on any NFC-enabled terminal at checkout.

 

But proximity mobiles payments accounted for just 0.8 percent of the third-payment mobiles market in China in 2013 due to the scarcity of terminal devices, said consultancy iResearch Group.

 

Transactions in China using third-party mobiles payments surged 707 percent year-on-year to 1.2 trillion yuan ($$197 billion) in 2013.

 

Although the PBOC has given strong support to develop NFC-based proximity mobiles payments, Wang Weidong, an analyst with iResearch Group, said there are many hoops to jump through before the technology can compete with the popular Internet-based mobiles payment system, Alipay.

 

"First, there are not many NFC-enabled smartphoness in China. To promote proximity payment, you need people to buy mobiles devices that are tailor-made to use this technology.

 

"Second, how do you educate and nurture a group of people who are comfortable using proximity payments? That's also important because it is very difficult to change the habit of users," Wang said.