Mobile Commerce

Apple Pay Hits Snag In China As UnionPay Negotiations Lag

China’s growing share of iPhone 6 users will have to continue to wait to use Apple Pay, as negotiations with China’s UnionPay card processor and Chinese banks have yet to reach agreements with Apple, the Chinese news site Caixin reported.

As the sole entity in China allowed to handle interbank payments, UnionPay is the key hurdle for Apple to clear for it to get its mobile payments option into the hands of the mobile-focused consumer base in China. An anonymous UnionPay employee reportedly told Caixin that the company doesn’t have a time frame for even bringing on Apple Pay into the country, nor have negotiations progressed.

Reports last month indicated that Apple Pay would roll out in April across China, but it appears those reports were only rumors. While adoption may be a while away, an Apple Pay launch in China would be a big step forward for NFC-based proximity payments in China. Mobile pay is popular thanks to Alipay’s remote mobile payments, but NFC has not quite caught on.

In February, Apple had software developers testing its iOS 8.3 version to see if it would support UnionPay, but despite the efforts, the measure has not progressed since. Talks have been in the works since last year, Caixin reported, but sources indicate that Apple hasn’t secured a strong relationship with UnionPay, nor has it been able to create positive moves with Chinese banks. Even if Apple secures UnionPay’s approval, it still needs to get the banks on board to make Apple Pay a viable mobile payments option across China.

While it has not been confirmed, Caixin cited an unnamed bank employee in China that indicated that the 2 percent merchant fees for Apple Pay transactions could be what are holding back negotiations as that source indicated Chinese banks say those fees are too high.

“Many large banks that are already part of mature point-of-sale networks do not want to lose such a large percentage of their profits in a deal with Apple Pay,” the source said, according to Caixin.

Outside of China, Apple has also seen delays in bringing its mobile payments option to the U.K., which was once reported to be joining the region as soon as the first half of 2015, but no new updates about when it will enter the U.K. have been reported.

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