Details of the agreement are yet to be finalised, pending feedback from banks that issue cards, bloomberg reports, citing various sources. UnionPay, the nation’s largest payment and clearing network, aims to introduce Apple Pay as soon as 2016.
Apple’s mobile payment system may help UnionPay and Chinese banks avoid competition from third-party payment service providers including Alibaba Group and Tencent Holdings. For foreign companies such as Apple and Samsung Electronics Co., China offers an opportunity to profit from a market where mobile payment transactions jumped 134% to CNY 22.6 trillion (USD 3.5 trillion) in 2014, central bank data show, the source cites.
Via NFC, Apple Pay enables users to pay for purchases by tapping iPhones or Apple Watches with pre-stored bank card information on a device at cash registers. Through the UnionPay accord, the system could be rolled out to more than 5 million point-of-sale machines that are NFC-enabled in China.
A year after its introduction, Apple Pay system accounts for only 1% of all retail transactions in the US, researcher Aite Group said in October, 2015, the source cites.
Apple Pay charges 0.15% of the value of each purchase made through its system, out of the 2% fee paid by merchants in US, Caixin magazine reported in February, 2015, the source cites. Such a rate would be too expensive in China, given that the total fee paid by some merchants is only 0.38%, Caixin said.
Alibaba’s Alipay affiliate controlled 83% of China’s third-party mobile payment market in 2014, while Tencent’s Tenpay held 10%, according to market-research firm iResearch. Alipay allows its more than 400 million real-name registered users to make purchases from desktop computers, tablets and smartphones at over 130,000 bricks-and-mortar merchants, according to its website, the source cites.
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