Xiaomi Corp will soon become the first Chinese smartphone vendor to add a mobile paymentservice to its handsets, pitting itself against foreign rivals Apple Inc and Samsung ElectronicsCo, which have already launched similar services.

The Beijing-based company said on its official microblog on Tuesday that it will launch MI Payon Thursday by partnering with China's No 1 bank card association, China UnionPay.

Using near-field-communication or NFC technology, MI Pay will allow consumers to pay billssimply by holding their smartphones near point-of-sale terminals. It can be linked to creditcards and debit cards from 10 banks, the company said.

With MI Pay, consumers can also use smartphones as transportation cards to take buses andsubways. A Xiaomi employee familiar with the matter told China Daily that the transportationservice is already ready in Shenzhen and Shanghai and under tests in other four cities.

The move came as smartphones look and operate largely the same and players are looking tooffer more diversified services to differentiate their products. Xiaomi's largest domestic rivalHuawei Technologies Co Ltd also said last month that it would soon launch similar paymentservices.

Li Chao, an analyst at research firm iResearch Consulting Group, said China's mobile paymentmarket is dominated by internet heavyweights Alibaba Group Holding Ltd and Tencent HoldingsLtd.

"NFC-enabled payment services are still quite new in China because local consumers havebeen using Alipay and Tenpay (mobile payment applications developed by Alibaba andTencent) for a long time," he said.

Alipay and Tenpay enable consumers to pay bills by scanning codes with smartphones.

"It is quite difficult to change consumers' preferences and user habits," Li said.

In February, Apple launched NFC-enabled Apple Pay on the Chinese mainland. Later,Samsung also made a similar move. But so far, the two firms have only gained a limitedpresence in the payment sector, according to Jin Di, an analyst at research firm InternationalData Corp China.

The move also came as Xiaomi struggles with declining shipments amid mounting competitionfrom rivals and a slowing smartphone market.

Wang Liming, a 25-year-old programmer in Beijing, said: "I take the subway to my workplaceevery day. The application of MI Pay in the transportation sector is quite appealing, but notenough to persuade me to buy a Xiaomi smartphone."

Reprinted from China Daily