Apple Pay debuts in tough market
Print Edition
APPLE yesterday launched its mobile payment service Apple Pay in China’s mainland, pitting the US technology giant against strong domestic rivals in a large but already crowded market.
Success in the world’s second-largest economy is crucial for the California-based firm. Apple Pay is available in only a few other countries including the United States, Britain, Canada and Australia.
Unlike in most other countries, mobile payment systems are already well-established in China so Apple does not have a first-mover advantage.
“Can’t wait for you to try it and see how incredibly easy it is to use!” Apple Chief Executive Tim Cook said of the service on Weibo.
Using the payment service via his Apple Watch to buy some milk, Li Jun, a Shanghai-based designer, said: “It’s unique pleasure to use it.”
Some users, however, complained of difficulties linking their bankcards, the key step to using the payment service, apparently because people rushed to sign up.
China had 359 million online payment users as of the middle of last year, up 18 percent in six months, according to the China Internet Network Information Center.
China’s mobile transactions rose 57 percent last year to 9.3 trillion yuan (US$1.4 trillion) last year, according to an industry estimate.
The dominant mobile and online payment providers are Alibaba, with nearly three quarters of the market, and Tencent, with 17 percent, according to BigData Research.
The Apple brand commands a strong following in China, especially as a status symbol among the emerging middle class.
Ray Zhao, an Internet industry analyst at Guotai Junan Securities, said: “There is still a chance for Apple Pay to grab some market share. Some loyal Apple users may prefer using it instead of other tools.
Other experts claim Apple’s iOS system could provide better security for transactions, but most Chinese people use Android phones, ruling them out as Apple Pay users.
Apple has found a powerful partner in China, bankcard provider UnionPay, which has links to the central bank but has lagged technology companies in developing online payments, analysts said.
Apple Pay is available only via selected devices — the iPhone 6 and 6S families and Apple Watch — and can be used once a user has linked their Apple ID to a bank account. About 20 Chinese banks support the service, while UnionPay has provided point-of-sale terminals for completing transactions.
“Apple Pay needs to find the right angle to get in the market,” said analyst Fu Liang.
“Competition is intense and there are at least a dozen strong players, but the space is big enough,” he said.
Apple Pay works through fingerprint identification using near-field communication (NFC) technology.
The new service might provide a catalyst for the development of NFC technology in China.
Phone companies Huawei, Samsung and ZTE all manufacture NFC-capable models and are developing new models.
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