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Can Apple Pay Compete In Alipay-Dominated China?

In the mobile-driven population of China, there’s already a clear leader in mobile payments — Alipay, Alibaba’s mobile payment system. Can Apple keep up even if it gets approved to bring Apple Pay to the country?

Apple Pay hasn’t even entered China’s market, as it still must clear regulatory hurdles, but it appears that Apple may already be behind in the China’s mobile payments game. At least that’s what some analysts are saying.

“Apple is very late to the payments game with Alibaba and Tencent well entrenched,” Shiv Putcha, an associate director with the International Data Corp’s Asia/Pacific Consumer Mobility and Social Consumer Research team, told China Daily. “Keep in mind … only Apple Pay users can avail this service while virtually all smartphone users can avail payments through an Alipay or WeChat app.”

Recent reports indicate Apple and China’s Union Pay have struck a deal to allow Apple Pay to launch April 28 in China, though it’s unclear if that date will be hit.

While Apple is slowly gaining more of the smartphone marketshare in China, it’s still very much an Android-dominated market. Putcha said this may also be a deterrent for Apple being able to gain more of the mobile payment market share. According to stats from Beijing-based firm iResearch Global Inc., Alipay accounted for 82.3 percent of China’s mobile payment market in 2014. Tenpay accounted for 10.6 percent, and the rest is split between about eight others that make up a sliver of the mobile payments. Apple Pay would also have to compete against Tencent’s WeChat, a social messaging app that enables mobile payments.

While Apple may not be the top smartphone maker in China, Bloomberg reported the company is trying new routes to get its loyal iPhone customers on board with the iPhone 6 by offering an iPhone trade-in program in China similar to what it has done in the U.S. Getting more iPhone 6 users would help put the Apple Pay capability into users’ hands, which could help drive Apple Pay transactions if the service actually makes its way into China. The program is said to start today, March 31.

Siyun Zeng, a mobile media analyst from London-based ISH Technology, told China Daily that Apple Pay may motivate China’s consumer base to buy iPhones, but Apple still has to clear the mobile payments option through the Chinese government in the same manner Alipay has already done.

Zeng said China’s mobile wallets already have captured what Chinese consumers are demanding from their mobile payment experience, and there are new companies ready to enter the market. According to Zeng, China’s mobile wallets already enable “bill splitting, taxi hailing, online shopping, merchant location/service searching, [and] buying train/flight tickets,” which would leave Apple trailing behind in its offerings. Mobile payments in China is said to be around a $965.1 billion business, iResearch data indicated.

Sandy Shen, Gartner’s consumer services research director for mobile devices, said consumer loyalty of iPhone products could help eventually drive up mobile payments for those Apple enthusiasts in China, but even for those who she called the “early adopters,” it could be an uphill battle because of Alipay and WeChat’s dedicated bunch of users and merchants.

“It takes time for average consumer to learn how to use the service even if they are loyal to the iPhone,” Shen wrote in an email to China Daily. “But people’s loyalty to the device may not be necessarily translated to apps/services.”

 

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