The mobile wallet business is crowded and tough to navigate, but Kuapay has a solution: find a monopolist and partner up. In 2014, the company will begin working with China UnionPay, the country’s sole payment processor, to tap into the sought-after Chinese market, which has more mobile users than any in the world.
The big problem with using your cell phone to pay for physical purchases is that it’s hard to beat cash and credit cards for convenience. That means most mobile wallet businesses live and die with their partners—financial institutions, telecoms or merchants—which can put mobile wallet products in front of consumers, and give them a reason to use them with discounts and incentives.
For an example, look no further than Square’s mobile wallet, which partnered with Starbucks to score a $25 million investment and placement in 7,000 locations in the US.
Kuapay, which allows you to use your credit cards through a single, secure mobile app, lags behind its competitors, at least in the United States, where only 600 merchants are equipped to take its payments. But the company also has a presence in Spain, and in Chile, where CEO Joaquin Ayuso de Paul says it is the “official” mobile payments provider. What does that mean? It means that unlike in the US, where payment processors proliferate, in Chile the country’s payment processor has a monopoly, and Kuapay is its mobile wallet solution.
The company’s proof-of-concept convinced China UnionPay to give it a trial run in two provinces next year. The agreement gives Kuapay a chance to be on the ground floor as China introduces mobile wallet concepts to more than 1 billion mobile subscribers. China UnionPay just launched a mobile wallet partnership with Chinese telecoms. Aside from Kuapay, it will be among the first foreign third-party payment apps to go live in China; even domestic companies like Alibaba haven’t made big in-roads with their offerings yet. Competitors like Google Wallet and Square haven’t announced plans to bring their services to China.
There’s already a possibility of synergy: One of Kuapay’s American partners is Yum Brands, which has accepted Kuapay at several dozen KFC locations as part of a pilot program. KFC is the most admired brand in China, and one of the most successful foreign companies operating there, making it an ideal role model for Kuapay’s Asian forays.