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A British startup just scooped Apple in China with a ’800lb gorilla’ deal
It’s a gorilla of a deal.
British payments startup Powa Technologies has signed a 10-year deal with China’s state-owned payments company to bring its mobile payment app to China.
Powa is setting up a joint venture with China UnionPay, the only credit card issuer in the country. The joint venture will launch PowaTag UnionPay, an app that lets people pay for things in real world shops at the tills through an app on their mobile.
Powa’s founder and CEO Dan Wagner told Business Insider: “This is like winning the lottery for us, it’s such a huge deal. Nobody’s ever done a deal in British tech like this ever.”
UnionPay has over 4.5 billion cards in circulation across China and works with 6 million merchants across the country. Wagner says: “They are the only partner you want in China for payments — there is no other partner.”
The deal will introduce regulated, real-world mobile payments in China for the first time. Local operators Alipay and Tencent briefly tried to offer the service through their apps but were shut down by the government over licensing issues.
Bloomberg recently reported that Apple was close to signing a deal with UnionPay to introduce its mobile payment option, Apple Pay, to the country. But Wagner says: “It’s Powa that has done the deal.”
“It’s a fantastic endorsement. It’s an extraordinary move for a government-owned multi-trillion dollar company to outsource and rely upon a small British tech company to deliver this infrastructure for the whole of China. It’s extraordinary.”
Wagner, who became well-known during the 2000 dotcom bust heading his company Dialog, says Powa has been working on the deal for a year, after being introduced to UnionPay executives through contacts in China.
“We have similar deals with other banks and telecom and card issuers that we’re about to announce over the coming few months but this one is the 800 lb gorilla.”
Powa’s PowaTag app lets people pay using mobile wallets or cards linked to their accounts through an app on their mobile for things in stores. But it also blends aspects of virtual reality, letting you scan items and adverts and then buy them.
Wagner says: “It’s being initially rolled out as a pay at till proposition and then allowing people to use PowaTag UnionPay on printed adverts, TV commercials.”
The joint venture is aiming to have 50 million consumers using the technology by the end of its first year and wants to be live across 1 million shops. Wagner says: “Over the last few months we’ve trained 26,500 sales people. The numbers are just off the scale.”
Powa Technologies
Powa CEO Dan Wagner.
Wagner says the joint venture is forecast to generate $5 billion (£3.3 billion) in revenue over the next 2 years, with profits split roughly 50-50 between Powa and UnionPay.
He’s also hoping the deal will drive the adoption of PowaTag in other markets, saying: “Another thing to remember is Chinese consumers spend when they go on holiday. All of these people are going to be coming to the west with their PowaTag enabled smartphones — it stimulates adoption in other markets. It is a milestone deal, no question about it.”
Powa, launched in 2007, raised the biggest ever Series A funding round in 2013 when it raised $76 million (£50.6 million) from Boston investment house Wellington Management. The company was reportedly valued at £1.6 billion ($2.4 billion) in a deal to buy Hong Kong payments company MPayMe last year.
Wagner said Powa is looking at raising more money, as revenue from the joint venture will take 18 months to filter through. He says: “We’re looking at a number of options including a public listing. This deal makes a huge difference in terms of our profile.”
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