Xiaomi’s Mobile Wallet Pays You to Use It

Back in 2014, the idea of mobile payments was starting to catch on, but for the most part, there was a lot of hesitation among consumers.

A consumer study found only 24 percent of respondents were likely to make mobile payments that year, and a separate study found 84 percent were concerned about the security of such payment methods.

While these are both points starting to change, Chinese phone maker Xiaomi may have the answer: free money for mobile wallet users.

Xiaomi’s plan is simple in nature: when people make deposits into the mobile wallet’s balance, like with PayPal or the like, Xiaomi then rewards said users by paying interest on the sum kept in the mobile wallet, much like a savings account might.

Better yet, the interest involved is no small sum either. Xiaomi users get a hefty 3.058 percent interest, which is then deposited in a free phone app.

The new wallet is still in beta testing, so just when it will be available to users—or if those users will still get that three-plus percent rate on balances—is as yet unclear.

Also, none of the phones that Xiaomi makes, at last report, will be available in the United States, at least not yet. Right now, the company doesn’t have the necessary support infrastructure, like call centers and such, for a United States expansion.

But still, Xiaomi is offering a very powerful deal for several reasons. One, this might be the first mobile wallet system to offer interest on balances carried. That’s no mean feat in its own right, but look at the number: just over three percent.

Just for reference, a Bank of America Featured CD, requiring a $10,000 minimum balance, will offer you just 0.07 percent interest. You’re reading that right; not even one percent.

Xiaomi’s mobile wallet will give you somewhere around 40 times what a bank CD will at one of the world’s leading banks. A mobile wallet’s balance is handing a major bank’s investment vehicle its hat, and that by itself is a development with some really staggering implications.

What if Xiaomi can keep this up for any length of time? Will PayPal have to restart its own interest program, dropped back in 2011? Will Apple Pay have to start offering similar terms? Or is this the kind of thing that won’t affect much outside of China? Will people actually start making mobile wallet choices based on the rate of return?

It’s going to be interesting to see if Xiaomi can keep this going for any length of time, because at this rate, it may well have a lot of interested parties just looking for a decent interest rate more than it has people looking for an easy way to pay for things.