March 25, 2015
Rumors are ripe that Apple has reached common ground with China UnionPay, and we might witness an Apple Pay rollout in China within the next month. As reported by kapron ASIA, Bank of China has cited in a Weibo post that April 15th could be the day of the official announcement, while April 28th could be the official launch day. China’s mobile payment market presents a positive opportunity for Apple Pay. Substantial NFC infrastructure is already present in China. There are over 4 million POS terminals in China that support UnionPay’s NFC enabled Quickpass technology.
There has been an explosive growth in mobile payments within China lately, having reached $982.3 billion in transaction volume in 2014, according to iResearch. As of now, mobile payments in China is being driven by Alibaba and Tencent, which currently hold more than 90% of the market share. Apple Pay has a tough fight ahead in China, because of this local dominance; however, there are other challenges as well. NFC based payments in China accounted for only 1.6% of the total mobile payments market back in 2013. It is yet to be seen whether Apple Pay could help increase this value.
We had earlier reported about some issues that Apple Pay had been facing concerning its expansion into the Chinese market:
There are no insights yet as to how Apple has resolved the above issues, especially the regulatory issues imposed by the Chinese government. One possibility could be that UnionPay is now offering a manageable rate for Apple Pay. It is also yet to be seen whether Apple will establish a successful partnership with Alibaba regarding Apple Pay, in order to ease the challenge by local dominance.
Alibaba and Apple had already jointly developed the fingerprint authentication system for Alipay, hence it was expected that they would soon build a cooperative payment system. There had also been speculation that Apple might bypass UnionPay and partner with Alipay to enter the Chinese market. This bypass might not be a possibility now, as the fresh rumors suggest that Apple is favouring China UnionPay.