Third-Party Payment in China: IPS

In the Money Through a Merchant Focus

Publication Date	October 2007
Publisher	Maverick China Research
Product Type	Report
Pages	24
ISBN Number	not applicable
Product Code	MAV00017

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Summary

IPS is one of China's oldest third-party payment providers, and through their online payment platform, is one of the few Chinese payment providers making a profit. To date, they have been successful where others have failed by focusing on merchant-targeted online payment solutions. IPS has been able to make money in spite of a very small registered user base of only 1.5 million. In this report, we dissect how IPS, already 7 years in the industry, has been successful so far and whether or not their strategy is suitable for future growth in China's payment industry.

Content

1 Industry Overview: Key Factors Shaping Third-Party Payments in China 1
- 1.1 Continued preference for cash payments, but bank card payments rising 1
- 1.2 Credit card use remains low; debit cards widespread 2
- 1.3 Limited coverage of non-cash payment services 3
- 1.4 China UnionPay's bank card monopoly 4
- 1.5 Quasi-online payment systems an interim solution 4
- 1.6 Two ISPs, 162 million Internet users 5
- 1.7 Two mobile operators, 500 million subscribers 6
- 1.8 Contactless smartcard use increasing but largely limited to buses and subways 7
- 1.9 Government regulations and the "national interest" 7
2 IPS - In the Money Through a Merchant Focus 10
- 2.1 Company Overview 10
  - 2.1.1 Ownership 10
  - 2.1.2 Organizational Structure 11
  - 2.1.3 Management Team 11
- 2.2 Business Performance 12
  - 2.2.1 Financial Performance 12
  - 2.2.2 Users 14
- 2.3 Services and Channels 15
  - 2.3.1 Business & Operation Model 17
- 2.4 Markets and Coverage 18
- 2.5 Marketing and Branding 19
- 2.6 Partnerships 20
  - 2.6.1 Bank Partners 20
  - 2.6.2 Merchant Partners 22
  - 2.6.3 Technology Partners 22
- 2.7 Competitive Analysis 23
  - 2.7.1 Strengths 23
  - 2.7.2 Weaknesses 23
- 2.8 Outlook 23
List of Figures
- Figure 1: Credit cards issued in China and in the US (M) 3
- Figure 2: Internet Users in China, 2001-2006 (M) 5
- Figure 3: Mobile Subscribers in China, 2002-2010F (M) 6
- Figure 4: China government groups involved in third-party payment regulation 9
- Figure 5: Universal Technology Holdings Company Structure 11
- Figure 6: IPS Management team 11
- Figure 7: IPS Annual Transaction Volume, 2001-3Q2007 (RMB M) 12
- Figure 8: IPS Annual Number of Transactions, 2003-2006 (M) 13
- Figure 9: IPS Average Transaction Size (RMB) 13
- Figure 10: IPS Fee Structure for Merchant Partners 17
- Figure 11: IPS Operation Model 18
- Figure 12: IPS Payment Service Coverage by Channel 19
- Figure 13: IPS logo 19
- Figure 14: IPS Bank Partners 21
- Figure 15: Select IPS Merchant Partners 22