PreCash Inc., operator of one of the leading cash payment networks in the U.S., announced it has signed an agreement to form China eCash.
The joint venture will operate in China and will provide prepaid replenishment to markets including the Chinese mobile communications market, which in the last two years reached numbers that exceed the entire population of the United States.
China eCash will enjoy an edge in the marketplace from the start. National contracts are already in place with the country's two leading mobile service providers, China Mobile and China Unicom. China eCash also has an existing retail network of 55,000 locations and an established customer base in five provinces, secured through the partners in the joint venture, Richard Wang and David Ding, principals of a Chinese holding company.
PreCash will offer new technology, financial support and management expertise in the payment industry to China eCash. The move brings the number of PreCash retailers worldwide to 85,000. PreCash expects to process approximately 125 million payments worldwide in 2006, for a total of nearly $3 billion in transactions on their system for the year.
"This venture will allow us to tap into one of the world's fastest-growing markets, where cell phone users already significantly outnumber landline customers," said PreCash CEO John Chaney.
Since its inception in 1998, Houston-based PreCash has built a comprehensive network for prepaid refill, electronic bill payment and stored value products. All products are designed to offer mainstream financial services to cash-paying consumers, of which there are approximately 65 million in the U.S., while meeting the needs of both retailers and service providers.
The company has set the standard in the U.S. for bill pay. It recently more than doubled its prepaid offerings and is focusing significant attention on the growth of its stored value product line. Now, PreCash will bring its expertise to the rapidly expanding electronic payment market in China, where the vast majority of the country's 400 million-plus wireless subscribers opt for prepaid accounts.
"Consumers in China tend to view a prepaid plan as the rule, rather than the exception, due to the flexibility and value that the prepaid option offers," said David Ding, chief executive officer of China eCash. "PreCash is providing critical new technology and industry insight to a market that is looking for solutions and is growing by millions of users each month," said Ding.
Though the company initially will concentrate on expanding its current market presence in mobile phone replenishment and growing geographically into more provinces, it will also leverage its experience to explore bill pay and stored value products, a central part of the PreCash offerings in the U.S.
In addition, China eCash plans to expand into the prepaid utility and transportation market to serve the large segment of Chinese consumers who prepay for basic utility services. An expanded product line would allow Chinese customers to enjoy the convenience of using one payment provider for the majority of their day-to-day financial transactions.
The new company will be headquartered in Beijing.