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Analysis | Apple Pay faces a battle with banks to enter China's huge mobile payments market

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The Apple Watch enables users to easily pay for transactions using the Apple Pay mobile payments system. Photo: AP
Following hot on the heels of the designed-for-China Apple Watch, the world's largest public company is expanding its Apple Pay mobile payments system that will put it in direct competition with Chinese tech giants Alibaba and Tencent. 
Since its launch in October last year, Apple Pay, the tech giant's mobile payment and digital wallet service, now accounts for two-thirds of all US mobile payments. Despite this success, adoption of the technology in the US has been slow, and Apple is now attempting to enter the more lucrative Chinese market, which saw more than US$960 billion in payments in 2014.

In February, China Construction Bank began trials of Apple Pay in Yunnan province using modified point-of-service (POS) machines with near-field communication (NFC) technology, according to Century Weekly. 

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While the Yunnan experiment was not unsuccessful, analysts say that mainland banks may be cautious in approving Apple Pay's expansion into China. 

"Chinese banks may be slower and more cautious in allowing Apple Pay to enter the wider market," said Guo Tianyong, a professor with the Central Economic and Financial University in Beijing. Guo pointed out that the Yunnan experiment was limited in scope with more controllable risks. 

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Mobile payment is huge business in China, with the market increasing five-fold in size in the past year, according to iResearch. Chinese state owned credit card issuer UnionPay and Alibaba subsidiary Alipay are both major players, with Tencent quickly catching up thanks to its WeChat mobile payment service. 

However, Guo warns that company's ambitions may be thwarted by regulation. 

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