Apple Pay comes to China

Apple Pay finally comes to China, entering the country’s competitive mobile payment race.

The tech giant officially launched its much anticipated pay service in China on Thursday, through a partnership with China UnionPay

Users of the iPhone 6 or more advanced versions, certain iPads and Apple Watches in China will be able to use their devices to buy items across Apple’s second-largest market by revenue, using Apple Pay.

China is the fifth country where the service has been launched, after the United States, Britain, Canada and Australia.

The customers of 19 Chinese banks will be able to link their bank accounts to Apple Pay.

And UnionPay has provided compatible point-of-sale terminals for users to complete the transactions.

According to the China Internet Network Information Center, last year, 620 million people in China, or 90 percent of the nation’s Internet users, used a smart device to go online.

The potential market for Apple Pay is huge as nearly 360 million people in the country used mobile payment service last year.

SOUNDBITE (CHINESE) Shanghai citizen:
“I think it’s going to be a trend for consumers to use cell phone to pay rather than taking a wallet. It’s safer and more convenient.”

SOUNDBITE (CHINESE) Shanghai citizen:
“I think I’ll try Apple Pay because it’s convenient. I’m a iPhone user and I hope in the future more stores can be included by Apple Pay.”

From fast food chain like McDonald’s and KFC to high fashion boutique like Lane Crawford, the number of merchants that accept Apple Pay is growing.

Several Chinese Internet firms also began accepting Apple Pay, making the service available alongside Alibaba’s Alipay and Tencent’s Tenpay.

More online and offline retailers are going to accept the new payment service, chief among them being, Alibaba’s arch rival in e-commerce.

UnionPay has long sought to make a dent in China’s mobile payment market, which is dominated by Alibaba and Tencent.

It previously worked with the country’s three telecom operators to promote NFC-based mobile payment services.

The project failed to gain a sizable share of the mobile payment market, in part because of different technical standards employed by telecom operators and lack of merchant interest.

According to research firm Analysys, China’s third party mobile payment market was valued at 2.5 trillion U.S. dollars in 2015.

Alibaba and Tencent dominate the market.

Data from analysys show that Alibaba’s Alipay held 71.5 percent of the market in the third quarter last year, while Tencent’s Tenpay had carved out a 16 percent share.

However, Alibaba and Tencent have been locked in a breakneck race to lure consumers to choose to use their mobile payment service in a growing number of offline settings last year.

Progress came after both splurged heavily to offer discounts.

“So far, Tencent’s WeChat Wallet and Alibaba’s Alipay have dominated the market. The two rivals have been trying every way to lure users since 2013. Their payment structures and technology are more mature and they are widely accepted across China. But for Apple Pay, it still needs a long way to go to build up such system.”

Value propositions are therefore critical in persuading the country’s penny-wise users to switch to a new payment service.

SOUNDBITE (CHINESE) Mobile payment user:
“Whose offer is better, who will win me over. I think most users are comparing the offers of the mobile payment providers.”

Unclear of what benefit can be reaped through Apple Pay, some are holding out, preferring to just “wait and see.”

SOUNDBITE (CHINESE) Mobile payment user:
“I prefer Alipay because its system is more mature.”

Analysts predict that a promotional campaign similar to those that gave Alipay and Tenpay mass exposure will be used for Apple Pay in China.

But UnionPay and the banks are more likely to take the lead in this regard, rather than Apple.

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