Mobile Payments

Samsung Pay Launches In China

SAMSUNG

Chinese consumers loves their mobile phones.

Nearly 90 percent of them have one. And they love mobile payments on those phones, too. Total mobile transactions were up more than 60 percent last year in China and the volume driven by mobile on Alibaba’s Singles’ Day last year – 11/11/15 was $9.8 billion – And it was all mobile all the time.

No surprise that mobile wallet players are itching to enter. Apple Pay did a little more than a month ago. And yesterday, the pool got a little more crowded as Samsung rolled into town with Samsung Pay.

Like Apple Pay, Samsung’ launched with UnionPay — the only domestic card brand to operate in China.  Samsung Pay will enable any UnionPay cards to be uploaded and managed on the app.

But Samsung may have an edge that Apple doesn’t. Samsung Pay’s technology works across terminals that are NFC plus mag stripe. According to a Research and Markets report released in July of 2015, there were ~16 million POS terminals in China, a market that has seen 40 percent growth year over year. It’s reported that only 5 million of those terminals are said to be enabled for contactless payments.

And it’s no secret why every mobile payments player wants a piece of China’s mobile payments pie.

This mobile-loving country has more smartphones than the U.S., Brazil and Indonesia combined. It’s estimated that there are  560+ million smartphone users in China alone, which is more than four times higher than the U.S.

And the biggest difference?

Consumers in China seem to actually care to use their phones to make mobile payments, whether it be in-app, online or in-store. That’s a little detail that could make a big difference in how mobile payments players make their mark in that particular region.

But there’s just one hitch: The space is getting crowded. Fast. And it was a market that’s been tapped far before Apple or Samsung entered.

Now, the competition in China just got a bit steeper, after Samsung officially rolled out Samsung Pay in the region. But just how competition it will be is yet to be seen.

“We are pleased to be partnering with [UnionPay] to bring Samsung Pay to China,” said Injong Rhee, EVP and Head of R&D, Software and Services of Mobile Communications Business at Samsung Electronics. “The reception of Samsung Pay since its launch has been extremely positive and the service has already seen tremendous success in terms of availability and adoption by consumers. In compliance with national laws and regulations, we ultimately want to make Samsung Pay available to as many consumers as possible, so that everyone in China can have the opportunity to enjoy the simplicity, safety and convenience of our mobile payment solution.”

Samsung Pay is currently available on the Samsung Galaxy S7, Galaxy S7 edge, Galaxy S6 edge+ and Galaxy Note5 in China, with more models expected to enable the option in the future. Samsung Pay currently supports select credit and debit cards from nine banks, including China CITIC Bank, China Construction Bank, China Everbright Bank, China Guangfa Bank, China Minsheng Banking Corp. Ltd, China Merchants Bank, Hua Xia Bank , Industrial and Commercial Bank of China and Ping An Bank.

It eventually expects to support credit and debit cards from the following six banks: Bank of China, Bank of Beijing, Bank of Communications, China Bohai Bank, Industrial Bank and Shanghai Pudong Development Bank.

“China UnionPay attaches great importance to the security and innovation of payment. In order to follow the tendency of mobile payment in both China and abroad, CUP cooperates with industry to bring safe and convenient mobile payment experience for millions [of] cardholders. With the joint efforts of banks and Samsung, based on the safety testing and certification by relevant national testing agency, CUP QuickPass starting Samsung Pay service will bring users safer and more convenient mobile payment choice,” said Hu Ying, Assistant President of UnionPay.

Global Payments also shared its support for the mobile payments service.

“Global Payments is delighted to bring innovative commerce to merchants in China by supporting Samsung Pay,” said Frank T. Young, SVP, Global Product and Innovation. “Our continued commitment to leading payments technology across the globe allows us to offer another form of mobile payment acceptance to the broadest set of merchants.”

Still, the competition in China is expected to be fierce.

It is reported that within just two days of Apple Pay finally launching in China back on Feb. 18, Chinese shoppers reportedly activated 3 million payment cards within the mobile wallet. China Merchants Bank, one of 19 that is part of the Apple Pay rollout, reported that its customers connected 1 million bank cards to Apple Pay within the first couple days of the payment method becoming available, representing 35 percent of provisioned Apple Pay cards.

So far, Apple has secured the support of the credit card issuers/networks that account for 80 percent of China’s credit/debit cards. There are also 16 retail chains now supporting Apple Pay in the country, including Starbucks, McDonald’s and Kentucky Fried Chicken, with many also promoting discounts and offers for consumers who use Apple Pay.

But that’s not the only player the U.S. tech giants need to worry about.

Huawei Technologies, the Chinese handset giant, has been taking steps to push its mobile payment service even further into China. The company will be linking up with China UnionPay, the Chinese state-run bank card processing firm, and the collaboration works to offer a new payments service called Huawei Pay.

The news comes on the heels of a mid-2015 pilot program, with the acknowledgement that the testing portion of bringing the technology to market may not square with reality.

The Huawei service itself has grown from a relatively small number of participants, with entrenched competition from Alipay, among others including TenCent’s WePay. It was reported by the Wall Street Journal that the Huawei Pay system will rely on fingerprint scanning for authentication.

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Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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