Mobile Payments

Can Apple Pay Actually Crack Into China?

Apple Pay went live in China yesterday (Feb. 18). How did it go?

For now, there haven’t been any reports of massive problems, glitches, etc. Perhaps, Apple has worked out some of the launch glitches it saw when it made its U.S. debut.

Still, it’s far too early to tell just how the U.S. tech giant will fare in the mobile-crazed consumer population in China. The company with the lion’s share of mobile payments is Alibaba, with the mobile payments service Alipay from its financial arm, Ant Financial.

Apple CEO Tim Cook has said many times how China could be Apple’s greatest market eventually. Can the same be said about Apple Pay, where there is already a clear favorite for mobile payments? According to Jennifer Bailey, VP of Apple Pay, via Reuters, it can.

Apple Pay will reportedly work with 19 Chinese banks, as well with China UnionPay. China’s biggest lender, Industrial and Commercial Bank of China, agreed to work with Apple Pay this week on its launch day. So far, Apple has secured the support of the credit card issuers/networks that account for 80 percent of China’s credit/debit cards.

Apple’s UnionPay deal, however, could be a saving grace to make a mark in the region.

“China UnionPay and our Apple Pay solution has a huge advantage, given the footprint of China UnionPay,” Bailey told Reuters. “Its merchant acceptance network far exceeds what any of the other mobile platforms have today.”

But it still needs the consumers.

Why China really matters for Apple Pay is the fact that more than 358 million Chinese consumers made online payments using their mobile devices in 2015, according to stats provided by the China Internet Network Information Center. Still, getting Apple Pay into China hasn’t been an easy task for Cook, as there’s been plenty of regulatory hurdles to overcome.

Not to mention getting banks and merchants on board.

That makes the fifth country for Apple Pay, with its U.S. launch in the fall of 2014 now close to a year and a half behind us. It since has expanded to the U.K., Australia and Canada (but only through American Express-issued cards for the latter two). France is reportedly next during the second half of 2016.

For now, early projections suggest that Apple may have some struggles getting off the ground in terms of consumer adoption (as it has seen in the U.S.).

“People switch applications for significantly better experiences. It [Apple] has to deliver not just a little bit more secure or a little bit easier to use,” Mark Natkin, founder of Marbridge Consulting, told Reuters.

Reuters also spoke to one retailer in the area who shared a little bit about why Apple Pay may not exactly settle well in China. That problem, according to this merchant, is that Apple might just be too little, too late for a population who is already tuned into mobile payment options.

“With 100 percent saturation of local payment systems, no one in China is clamoring for Apple Pay,” the retailer explained. “Today, everyone has a local payment option on their phone, so Apple Pay is a solution in need of a problem.”

Which is a little bit of the same feedback the mobile payments service (along with its competitors) has gotten in the U.S. Many have argued that Apple Pay simply isn’t solving a problem in the payments marketplace.

Plus, for China, a solid base of consumers are already turning to Alipay (400 million active users). Of those users, 80 percent of them are using the service via mobile. So, Apple has the added challenge of trying to convince customers to switch to its mobile payments service over one they are already comfortable with.

“Alipay is an app for both Android and iOS system and has little requirements for the make and model of the mobile phone,” an Ant Financial spokesperson told Reuters.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.