Banking & Finance

Household spending

Consumers buy a new device to avoid queues at the bank

Household spending

Now installed in Chinese homes

China might have some of the largest banks in the world, but that doesn’t mean that their branches provide a quick and efficient service.

It’s not uncommon to go into a local branch of Bank of China or ICBC and find oneself at the end of a queue of 30 or 40 people – with only two counters open for business.

Making things worse is that the largest denomination of yuan note is Rmb100 ($14.64), ensuring that there are always at least a couple of customers ahead that want to count through piles of notes. This means that completing even the simplest task at the bank can sometimes require an hour of waiting in line.

And it is for this very reason that people are buying the Mini Lakala, a recently launched device that allows people to pay their bills without leaving home.

“The reason I bought is that it saves me time on trips to the bank, as well as queueing time,” one Guangzhou resident recently told China Business. Since he paid Rmb399 ($58) for the new gizmo, his number of trips to the bank has dropped significantly.

With a LCD display, a numerical keypad and a slot to swipe credit cards, the Mini Lakala would not look out of place next to a cash register in a store or restaurant. It can be used to pay off bills for utilities, credit cards and online shopping, as well as to add credit onto mobile phones. It is even possible to pay for traffic fines with the device.

The company behind the machine, Lakala, is no stranger to supplying payment solutions to retailers. Convenience store chains, such as Kedi and Haode, already use the company’s card-swiping machines in their outlets.

Lakala makes its money on its home version by charging fees on the transactions made on its device. Nor is it the first company in China to turn the living room into a point of sale. A few years ago Bank of Communications in Beijing released the “Delivery Pass”, a household banking terminal. The machine could be used to conduct banking services at home via an internet connection. But the Delivery Pass wasn’t marketed as widely as the Lakala – instead being targeted at a select range of very high net worth individuals.

For its service to gain wide acceptance, Lakala will have to convince customers that it is secure enough to keep their cash safe. One factor in its favour is that it does not use the internet but rather a dedicated line, which protects the user from much of the threat of online fraud.

Another safety feature is that Lakala is not directly involved in the transfer of funds – its role is to give the card information to the card operator, China UnionPay, which in turn conducts the transaction. As Lakala does not handle any of the money itself, it stands out from China’s pre-paid card operators, which hold onto any stored cash until payment (see WiC47).

Whether or not the Mini Lakala becomes one of the first great time saving devices of the 21st century remains to be seen.

But one thing is for certain. If it does catch on more widely, it could help cut down queues at the local branches, making a trip to the bank a slightly less time-consuming business.

Keeping track: Some new information has come to light on Lakala, which we profiled in WiC58. The company, which has just launched a payments terminal for home users, estimates it will be in 10 million households within a year. Backed by Legend and Alibaba, the company’s boss, Sun Taoren told the South China Morning Post the six year-old firm would soon by profitable and reckoned its terminals would benefit from online shopping. Another interesting use, according to Sun: “If you want to pay the money you lost at gambling to your friend, you can do it simply by inputting his bank account in the device and swiping your debit card.”(21 May 2010)

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