Xiaomi on Course to Collide with Samsung in Mobile Payment Market in India

Xiaomi, a Chinese smartphone producer that is closely trailing Samsung Electronics in India with low-priced phones, is set to collide with its Korean rival on another front -- mobile payment service.

The Indian Express said on September 2 (local time) that Xiaomi would launch "Mi-Pay" in India. Mi-Pay is mobile payment service that supports credit, debit and public transportation cards in China. The service was launched by Xiaomi in partnership with UnionPay.

Xiaomi plans to launch Mi-Pay in India in the form of the local platform UPI. The UPI system is a mobile payment system approved by the Indian government and can be used to connect major local bank accounts and smartphone payment services.

The Indian market already has mobile payment services including Tez of Google, WhatsApp Pay, PhonePe, Paytm, Truecaller and FreeCharge.

Samsung Electronics also launched Samsung Pay in India in March 2017, surpassing one million users in a month. Currently, the company is also providing specialized services such as QR code-based payment and the payment of utility bills.

According to Credit Suisse, the digital payment market in India is expected to reach US$1 trillion in 2023.

The introduction of Mi-Pay can become a burden for Samsung as Xiaomi is planning to load it into its budget phones. The Chinese company is now studying in what models it will include the payment service function.

Samsung Pay is usually loaded into mid- to high-priced models. In the current Indian market, Samsung Pay can be used with some J series models in addition to the Galaxy S and Galaxy Note. Some experts believe that Samsung Electronics will also put the mobile payment capability into models cheaper than mid-priced ones.

Samsung Pay and Mi Pay have hurdles to clear. The two have to overtake leaders such as Google Pay and Paytm. Google launched its mobile payment service under the name of Tez in India. The proportion of UPI-type payment already exceeded 75%. Local company Paytm has secured 300 million users and its corporate value is estimated at about US$10 billion. Warren Buffett, who is called “a genius in investment,” also joined the mobile payment service boom in India. According to the Wall Street Journal (WSJ), Berkshire Hathaway run by Warren Buffett invested in Paytm's parent company, One 97 Communications.

The mobile payment industry estimated Buffet’s investment at US$300 million. Other investors in Paytm include China’s Alibaba and Japan’s Softbank.

According to market researcher eMarketer.com, the percentage of mobile payments in India was only 16.5% in 2016 but is expected to surge to 30% this year.