Enabling Technologies

The Battles Apple Pay Will Have to Fight in China


It has been a while since we talked about Apple Pay. However, the mother corporation just today gave a reason to spread the big news across the Web – Apple Pay went live in China. The technicalities with Apple Pay are similar everywhere, but the story and the future are different in all of the now five countries the service is available in.

The launch of the service in China is a particularly important milestone for Apple because China is the second largest market behind the US by revenue. In Q3 2015, out of Apple’s $46.9 billion in revenue, China’s share was 27%. The reason behind China contributing such a bigger pie in the revenue is because of the demand for the iPhone in the region.

Regardless of the hardships Apple Pay will definitely face in China, the market opportunities are huge. But China is a country where mobile payments are deeply enhanced in terms of the scale of adoption.

Who will Apple Pay meet in China?

Apple Pay is doomed to fight the existing “monster” to make its living. Currently, the mobile payments space in China is dominated by Alibaba’s payments service Alipay that has 400 million users in the pocket. Alipay is the leading third-party payment provider that has become the largest mobile payments company in the world based on the number of users and transaction volume. The Chinese e-commerce giant said that 54 out of every 100 payments made with Alipay come from mobile devices.

Another battle Apple Pay got involved in with the launch in China is the one with Tencent’s WePay, which is available through messaging app WeChat. While Alipay was controlling 83% of China’s third-party mobile payment market in 2014, Tenpay held its 10%. Moreover, Apple Pay charges 0.15% of each transaction, which would be too expensive in China, given that the total fee paid by some merchants is only 0.38%, as stated by Bloomberg.

As reported, Apple Pay will initially support credit and debit cards from UnionPay. By 2015, CUP had 36.4% of the market share with more than 260 million Internet and mobile payment users, and transaction value exceeding $1.9 trillion globally. According to CUP’s official website, the company is the biggest international bank organization based on the total number of issued cards and transaction value, with an annual growth of nearly 20%. However, UnionPay didn’t give Apple Pay a monopoly on its customers. The company has also secured a similar partnership with Samsung.

Chai Hongfeng, Executive VP of China UnionPay, commented on the partnerships, “China UnionPay is dedicated to promoting payment innovations and providing secure, convenient mobile payment experiences for its hundreds of millions of cardholders, aligning multiple parties in the industry. We’re very excited to offer Apple Pay among a diverse set of innovative payment options that work with China UnionPay QuickPass.”

With UnionPay, Apple Pay can get a significant boost as UnionPay’s network has been extended to all the cities and rural areas in China and has enabled UnionPay Card acceptance across more than 150 countries and regions through extensive cooperation with financial and payment institutions around the world. The numbers say it all, UnionPay is a powerful ally for Apple Pay.

It is not clear how much Apple would charge for purchases made through Apple Pay in China. In the US, Apple gets 0.15% of all credit card transactions and 0.5 cents per debit transaction.

After launching in the United States and in the United Kingdom, Apple Pay is showing a gradual growth. Most recently, Apple Pay has expanded to Canada and Australia. It will be even more interesting to watch how Apple Pay is going to perform in China – the largest smartphone market in the world – which represents a significant business opportunity for mobile payments systems.

How is Apple Pay doing overall?

The most recent data published by First Annapolis Consulting less than a week ago has demonstrated some disappointing results. It turns out the adoption has been decreasing as 20% of iPhone 6 owners reported adopting Apple Pay (having used the service at least once) down from 22% in the from the last spring survey.

According to the official press release, among those that have adopted Apple Pay, only 15% say they use it more than once per month, compared to 19% in the spring survey.

On average, Apple Pay users have loaded 2.3 cards into their Apple Wallet; 75% of the cards loaded were general-purpose payment cards (41% credit, 30% debit, 4% prepaid), while 25% were proprietary retail store or loyalty cards which Apple began enabling only in the second half of 2015.

However, despite the minor decline, Hugh Gallagher, a Principal at First Annapolis, has commented in the press release, “At this point in time, the typical financial institution can expect 1 to 2% of cardholders to use Apple Pay two or more times, based on the survey results and Apple’s share of the US handset market. This represents positive momentum for the evolution of the US mobile payments market, but it also suggests a long adoption curve. Despite different stakeholder interests and mobile-related initiatives, most signs point to long-term success.”



MEDICI Team is a group of content writers, bloggers, journalists, researchers, and editors from the MEDICI who collaborate to create FinTech insights.

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