Mozido LLC is buying its way into China, giving it a head start as big companies like Apple also eye the country's payments market.

Mozido's acquisition of Beijing-based payment processor PayEase Corp. (which also has a U.S. office in Santa Clara, Calif.) comes less than two months after Austin, Texas-based Mozido acquired CorFire, a company previously owned by South Korean IT services provider SK C&C, to strengthen its mobile wallet technology.

Mozido, which did not disclose financial terms of the PayEase deal, is the latest in a series of U.S. technology and payments companies eyeing China for international expansion.

"There are green fields to be had, and you can avoid the incredibly complex value chains that are all jammed up in the U.S.," said Tim Sloane, director of emerging technologies advisory services for Boston-based Mercator Advisory Group.

U.S. companies generally find it difficult to grow and prosper in China, but Mozido "appears to have found their way around that" in acquiring a company based in the country, Sloane added.

Mozido is positioned well for mobile commerce in China, whereas Apple may find it difficult to establish a business model similar to the U.S., where it enjoys the support of local card brands and issuers, Sloane said.

"The folks in the existing value chain [that Mozido gains through PayEase] probably are going to be interested in finding technology that will help them get into the market faster," Sloane added.

PayEase processes nearly all debit and credit cards in China through its connections with 23 banks and China Union Pay, Visa, MasterCard and JCB. Through PayEase, Mozido will continue to target retailers, hospitality merchants and banks with mobile payment technology and financial services.

PayEase also will help Mozido adjust to Chinese regulations because it is one of five companies in China granted a cross-border license, said David Luther, executive vice president and chief business officer of Mozido. That cross-border payment gateway will help Mozido's merchants in other countries as they expand into China.

The license covers five categories of services, including physical goods trading, education, hotel and hospitality, airline tickets, and digital content and software, Luther said. For cross-border transactions, PayEase will convert Chinese currency, or Renminbi, to merchants' local currencies.

PayEase's customers include Amazon, Apple, iTunes, Burberry, H&M and Softworld, as well as others in media, travel, TV shopping, e-commerce, insurance, mobile carrier and the online gaming space.

"This does not change our business model," Luther said. PayEase operates "behind the scenes" in processing payments for its clients, similar to the white-label services Mozido delivers, he added.

Mostly, Mozido sees potential in providing mobile payment, financial and shopping services to those living in less developed markets outside of the country's major cities, Luther said.

Mozido may be encouraged that Alipay, the payment affiliate of Chinese e-commerce giant Alibaba, reported that China's less developed provinces led the company's mobile payment growth in 2014.

Mozido's plan is to essentially "leapfrog the traditional POS" for those merchants and consumers without as many card payment options, Luther added.

"The payment processing technology in China is comparable to the U.S., but the use of credit, debit, and mobile payments at the point of sale is not as available outside the major cities," Luther said. "Within cities, there are many more people, almost all are comfortable transacting on mobile phones to engage, pay, and reward during their shopping and payment transactions."

Last month, Mozido hired former MasterCard executive Ron Hynes as its president for global markets. He will oversee Mozido's operations in China and Asia Pacific, as well other markets. This month, PayEase began offering online payment services in Taiwan through a partnership with e-commerce company OnePaid

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry