Apple Pay coming to China in time for Spring Festival in February if no more hurdles arise, reports say

China UnionPay expected to grease the wheels for introduction of Apple’s mobile-payment system but user behaviour on mainland could present a formidable challenge, pundits warn.

PUBLISHED : Wednesday, 25 November, 2015, 8:18pm
UPDATED : Wednesday, 25 November, 2015, 8:36pm

Apple’s much-anticipated entry into China’s booming mobile payments market could put the US technology giant on a collision course with domestic providers Alibaba Group and Tencent Holdings.

Analysts on Wednesday said the reported introduction of Apple Pay on the mainland early next year may create a more dynamic market, but it will not have a big impact on the existing industry leaders.

“The main obstacles for the wide adoption of Apple Pay are current user behaviour on the mainland and its lack of a merchant ecosystem,” Forrester Research analyst Charlie Dai said.

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“Alibaba’s Alipay and Tenpay, the mobile payment service of Tencent used on WeChat, are very popular in large cities because of the convenience those platforms provide.”

Gartner analyst Sandy Shen added a more telling disadvantage for Apple Pay in the country: The majority of smartphone users are on Android devices.

Apple Pay is expected to launch on the mainland by February, following deals Apple has made with the big four state-owned banks, a Wall Street Journal report said, citing people familiar with the discussions.

China UnionPay, which operates the country’s largest payment and clearing network, will help introduce Apple Pay to the market, a Bloomberg report said, citing sources.

Apple’s Beijing-based spokeswoman said the company had no news to announce.

In May, Apple chief executive Tim Cook told China’s state-run news agency Xinhua that he was “very bullish on Apple Pay in China”.

That was about the same time when speculation surfaced that Apple wanted to partner with Alibaba to introduce Apple Pay on the mainland.

The iPhone maker already has a growing mainland retail network, which is expected to total 40 Apple Stores by next year.

READ MORE: Alipay gets new name in financial services push

If the reports prove true, Apple Pay will be made available in Hong Kong and the Chinese mainland almost at the same time.

Cook said last month that the company’s mobile-payment and digital-wallet service will be launched in Hong Kong next year with partner American Express.

The service, which was launched in the US in October last year, was made available in Britain this July.

Mobile-payment transactions in mainland China jumped 134 per cent to 22.6 trillion yuan (US$3.537 trillion) last year, according to central bank data.

Gartner’s Shen pointed out that Apple Pay is currently used by a little over 5 per cent of its iPhone user base since the recent large-screen models were equipped for the service

“Given the low penetration of iPhone users in China, Apple Pay’s addressable market is much smaller compared to Alipay and Tenpay,” Shen said.