China’s m-payments markets is predicted to explode over the coming years, growing by almost 50% year-on-year to reach 410 million users by 2013, says consultancy firm Celent.

In its report, Mobile Payments in China: Emergence of a Mega Market, Celent analyses the major players in China’s m-payment market: mobile operators, banks and third party payments companies.

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According to Celent, mobile operators mainly focus on contactless mobile payments and have established their own payment networks in shops and train stations. Banks are licensed to handle large transactions and are able to provide complex financial products. They mainly focus on large payments, with SD (secure digital) cards bound with bank cards. Third party payment companies are more competitive in terms of product innovation and discounts.

Celent claims a huge market will open if card network operator China UnionPay succeeds in linking the SD card to credit cards and bank cards.

“Partnerships with banks are very important for vendors who want to enter the market,” says Hua Zhang, analyst with Celent’s Asia Financial Services group and author of the report.

“Currently, the best business model in the Chinese market focuses on co-operation between operators and banks. Mobile operators and third party payment companies are also strengthening their co-operation with the banking industry for increased success.”

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In May this year China UnionPay formed an m-payments alliance aimed at establishing common security standards and business models for the emerging technology.

The group consists of 18 banks, including Industrial and Commercial Bank of China, Agriculture Bank of China and Construction Bank of China, mobile operators China Unicom and China Mobile, manufacturers like Nokia and Lenovo and several card and chip card producers, terminal operators, system integrators and academies.