Will Apple Pay Succeed in China?

22 Dec

Apple recently announced it will launch its payment service in China in early 2016 as the California-based tech giant aims to tap China’s burgeoning online payment market.

Apple will partner with China’s main bank card and payment firm UnionPay, a state-controlled consortium that has a monopoly on all yuan payment cards issued and used in the country.

China is one of Apple’s most important markets for mobile device sales, but until now the firm has been kept out of its online payments market.

The move will see Apple Pay challenge Tencent’s WeChat Payment and Alipay, the top player in China’s fast-growing online payments market.

UnionPay also plans to tie up with Samsung’s payment system, Samsung Pay.

In an interview with Reuters, Atlantic Equities analyst James Cordwell said he expects Apple Pay to take a larger share of the market than Samsung Pay, which was launched earlier this year.

“I think Samsung Pay depends on Samsung selling devices and I think if anything, Samsung is in retreat in that (Chinese)market. So, I don’t see Samsung Pay as a major threat,” Cordwell said.

Eddy Cue, Apple’s senior vice president of Internet software and services, told Reuters the collaboration with UnionPay and local banks would help Apple Pay give Chinese shoppers a “convenient, private and secure payment” option.

“China is an extremely important market for Apple,” he said.

Apple is the No. 3 smartphone brand in China, behind only Xiaomi and Huawei. Strong brand recognition should help Apple Pay break into China’s online payment market, experts say.

Still, Apple will face stiff competition from Alipay and WePay, “which have a strong user base. I see that as the main competitive threat to Apple,” said Cordwell.