November 19, 2014
Yesterday, Apple announced that App Store would now incorporate UnionPay as a payment option for customers in China. This would provide many more App Store customers in China a simple and more convenient way to purchase apps as China UnionPay is the most popular payment card in China. Customers can simply link their Apple ID with a UnionPay credit or debit card to enable app purchases.
Eddy Cue, Apple’s senior vice president of Internet Software and Services, said in an official press release: The ability to buy apps and make purchases using UnionPay cards has been one of the most requested features from our customers in China. China is already our second largest market for app downloads, and now we’re providing users with an incredibly convenient way to purchase their favorite apps with just one-tap.
The total number of UnionPay cards issued so far throughout the world has crossed 4.5 billion. Imagine targeting this large payment card database. Apple can then boast of cards-on-file numbers in the billions. It already has more than 800 million cards-on-file. The UnionPay network is extended to all cities and rural areas in China. This gives Apple the chance to target diverse segments of customers. Moreover, China UnionPay has enabled UnionPay Card acceptance across 140 countries through cooperation with over 400 institutions.
Hu Ying, China UnionPay Assistant Executive, said in an official press release: We’re very glad to cooperate with Apple to provide App Store users with UnionPay card payment service. China UnionPay will continue to join hands with Apple to provide cardholders with more convenient payment experience and diversified payment services based on the concept of openness, cooperation and service.
China has an estimated 100 million iPhone users which makes it a very important growth market for Apple. Earlier Chinese iPhone users had to pay in App Store using credit issuers from other card networks or use methods like direct carrier billing offered by China Mobile or setup prepaid accounts. This deal comes at a time when speculation is rife around possible partnerships between Alipay and Apple Pay as well. It seems Apple is seriously targeting a strong foothold in the Chinese market.
When it comes to processing payments between merchants, banks and credit card companies, it’s not wrong to say that UnionPay does portray kind of a ‘virtual’ monopoly in the market. There are no insights as such as to whether UnionPay would be linked with Apple Pay. But that must be something that Apple is planning for the near future, with this current deal an initial step.