Apple Pay, which allows iPhone users to make mobile payments by waving their phones at store checkout readers, arrived in China on February 18.
Apple started negotiating with major Chinese banks and UnionPay over profit-sharing and technical issues in 2014. A deal was reached in December as Apple announced 15 Chinese banks, including UnionPay, Industrial and Commercial Bank of China, agreed to let customers link their bankcards to Apple Pay. Four more banks joined the partnership later.
These 19 banks will pay Apple the fees at a discount, but banks that get on board later may not have the leverage anymore, says Apple.
Apple Pay consumers can make payments by passing their smartphones near point-of-sale terminals at stores. Purchases will be completed via near-field communication, a short-range wireless technology that lets Apple devices and banks exchange information.
Mobile devices using the NFC system add another layer of security to the transaction by generating a unique number when users add a card to Apple Pay. That "token number" will be encrypted and sent to banks with a one-time security code during transactions.
Currently, only about 60 % of POS terminals in China have NFC technology.
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