Apple Pay takes on China: here's why it won't be easy

As early as 2016, Apple customers in China could be paying for their groceries with just the tap of an iPhone or even via the latest wearable technology. The California-based company is partnering with UnionPay, a state-run payment giant, to bring Apple Pay to China – where mobile payments are expected to reach a total transaction value of over ¥12tn in 2016.

Who are Apple Pay’s competitors in China?

Apple Pay will be entering a market that’s currently monopolised by Alibaba’s Alipay and Tencent’s Tenpay. The former has over 350 million registered users in China and even allows users to login via facial recognition. Tenpay, on the other hand, has teamed up with WeChat, a Chinese mobile messaging app with over 650 million monthly users, to provide payment services for things like paying bills and getting personal loans.

Additionally, Apple’s partnership with UnionPay isn’t a unique one, as Samsung has also sealed the same deal. Both will now have access to UnionPay, China’s only bankcard network, with the potential to reach over 5 billion users. Apple also faces competition from local smartphone makers, Huawei and Xiaomi, who offer cheaper, high-quality smartphones that will not be compatible with Apple Pay.   

How will this impact the Chinese contactless payments market?

With China's contactless payments currently dominated by AliPay, the launch of Apple Pay could radically shake things up. However, drawing customers away from this popular service may prove to be an uphill battle. Alipay controls over 50% of the third-party payments market in China (it is even accepted by street food vendors and taxis), and dominates the mobile payment services sector with an 82% market share.

Apple Pay does have one big advantage: a seamless user experience. While other companies offer access to their payment service through an app, all Apple Pay users need to do is hover their iOS device over a contactless terminal. Is this enough to cause a contactless payment revolution in China? It may be a while yet.

Keep up to date with the contactless payment trends and other cutting-edge financial developments with The Money Cloud blogs. Or, if you're travelling to or from China and wondering about your international money transfer options, have a look at our guide on making payments abroad.

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