Apple’s mobile payment service will go live in China on 18th February and will be available to Industrial and Commercial Bank of China customers, the bank said in social media posts on Tuesday.
Working with Union Pay
The technology giant confirmed last year that it planned to release Apple Pay in China when it started working with Union Pay, which has a monopoly in the country over processing bank-card payments.
Apple Pay’s Chinese web-page shows the service is supported by 19 Chinese lenders including Bank of China and China Construction Bank.
China, Apple’s second largest market in terms of revenue, will be Apple Pay’s fifth market after the US, Canada, the UK and Australia and the launch enforces the idea that Apple is ramping up how aggressively it rolls out its payment service.
The case of Apple Pay, and mobile payments more generally, is interesting. Apple Pay has been active for just under one and a half years and yet it’s no where near being a threat to payment cards, let alone cash.
“When you ask consumers about mobile payments, they pretty much tell you they’re not interested — not everyone, but the majority of buyers,” said Penny Gillespie, a research director at Gartner Inc., a technology research firm, to the LA Times.
Mobile struggling in the West
Research from last October, published to coincide with Apple Pay’s one-year anniversary, showed that the service’s growth stagnated. Research from InfoScout covering the same period showed that just 16.6 per cent of people who owned an Apple Pay-enabled iPhone used the service. Not exactly the figures that enforce Tim Cook’s proclamation that 2015 would be the ‘year of Apple Pay’.
In Australia, ANZ became just the latest Australian bank to launch a mobile payment app, with Commonwealth Bank offering a tap and pay service since 2013, Westpac and NAB all offering mobile payments in their mobile apps. All the while, the Silicon Valley tech giant is struggling to gain traction with domestic banks. In fact, American Express is currently the only credit card Apple Pay users can pay with in the country.
In the UK, the banks were initially very much against Apple Pay, concerned about the fees – although most have since wavered and accepted it. Barclays held out the longest but even then it finally relented and should offer the service in the next couple of months.
Could the tide be turning?
However, it should be noted that the tide may slowly be turning on the shores of Apple’s hometown with JP Morgan planning to launch ATMs that work with smartphones and are contactless. We explored the significance of this at length here.
Whilst the tide may, and that’s not a guarantee, be turning in the US, in Asia, Apple has an altogether different and more difficult challenge. Apple may be the second biggest company in the world (not that it would want to boast about that given that it was number one only a few months ago) but the fact that Apple Pay is flagging in its own country shows that when it comes to mobile payments, there are altogether different monopolies.
New kid on the block
This is most evident in China where Alipay, owned by Alibaba’s financial division Ant Financial Services, has not so much a monopoly on the mobile payments market but a chokehold: it makes up roughly 70 per cent of the mobile market. To add insult to injury, it is integrated into the other mobile monolith – WeChat, owned by Tencent Holdings Ltd.
During Singles Day, the biggest online shopping day in the world, held every year on 11th November, Alibaba said that its 94 million mobile users spend $9.8 billion – which was more than the whole total spent the previous year.
Thanks to our 94MM mobile buyers, total mobile GMV of USD 9.8 billion exceeded total GMV on 11.11 2014 #1111Fest
— Alibaba Group (@AlibabaGroup) November 11, 2015
In this market, Apple isn’t the beast or trail blazer it is in the US, here it is the new kid on the block that has to convince the country to move away from very clear and firm FinTech favourites.
Only time will tell if Apple has what it takes to become a serious FinTech player in its second biggest market.
Starling Bank has become the first digital-only bank to join the Faster Payments Scheme as a direct participant. Traditionally, new bank entrants join the scheme via a sponsor, or another bank.
Fresh off securing $63m in funding and appointing a new CFO, the Stockholm-based provider of contactless and mobile card readers has partnered with China's payments giant, UnionPay, on increasing card acceptance for European SMEs.
Coinable became the latest cryptocurrency exchange company to receive a licence that allows it to operate in the state of New York.
Wirecard has partnered with Apple Pay in France to launch boon, its mobile payment application.