Apple Pay’s ambitious China entry greeted by glitch, skepticism

By Wang Jiamei Source:Global Times Published: 2016-2-19 1:28:01

Fate lies in partnerships in competitive market


Apple officially launched its mobile wallet service Apple Pay in China Thursday amid skepticism over whether it could bring any fundamental change to the country's already established mobile payment market.

Apply Pay received widespread attention in the world's largest iPhone market after it was activated at 5 am on Thursday. But the Chinese social media was flooded by frustrations from iPhone owners.

"Does that mean I have to buy a new iPhone?" a netizen wrote on his Sina Weibo account, saying he has an iPhone 5s. Apple said its service is only compatible with the iPhone 6 series as well as the Apple Watch and certain iPad models.

Because of a delay in the activation on a number of iPhones, some users said that they could not find the Add Card button within the Wallet app, while others complained they had repeatedly failed to mate their debit cards with their devices.

Li Chao, an analyst at the Beijing-based iResearch Consulting Group, told the Global Times on Thursday that the heat over Apple Pay seems natural given the customer base of both Apple and its partner China UnionPay, the country's largest bank card association.

But his first experience with Apple Pay was discouraging. "My colleagues and I also tried many times this morning," he said.

"It would be another story if [domestic competitor] Alipay launched a new service," he said. Neither Apple nor Unionpay is known as customer-friendly. Apple has always relied on its brand, while State-owned UnionPay lacks customer service experience, so preparations for this launch may not have been enough.

However, Chen Wei, an analyst with Beijing-based investment consulting firm ChinaVenture,  said Apple Pay is very easy to use. "I've used the service in the US, I think it's more convenient than Alipay," he told the Global Times. "There is no need to even wake the cellphone display."

Ambition vs reality

Jennifer Bailey, Apple Pay vice president, told Reuters Thursday in Beijing that "We think China could be our largest Apple Pay market."

But analysts are generally skeptical toward Apple Pay, as China already has an intensely competitive mobile payment market.

The timing is not good, as the market is already dominated by Alipay and Tenpay, the payment arms of China's two biggest Internet companies Alibaba Group and Tencent Holdings, according to Wei Wuhui, Tianqi Amoeba investment fund partner. Except in first-tier cities, the iPhone 6 and iPhone 6s are not widely used in China.

A report released last month by the China Internet Network Information Center showed that 358 million people used mobile payment services in 2015.

The number of iPhone users compatible with Apple Pay is estimated to be around dozens of millions in China, according to media reports.

In 2015, Alipay held a 72.9 percent share in China's third-party mobile payment market, with Tenpay taking 17.4 percent, according to data from bigdata.research.cn.

Li said the near field communication (NFC) technology Apple Pay uses may affect the payment approach of domestic players. But Alipay and Tenpay, which use the QR code scanning model, can easily follow suit, Li noted.

Retail partners

The number of retailers it signs up will also determine Apple Pay's fate in China.

Chiang Jeong-wen, a professor of marketing at the China Europe International Business School, remains skeptical.

"Alibaba and Tencent were able to tie up with financial institutions and banks and spent money to get point-of-sale (POS) devices installed in retail stores across China. It will be difficult, if not impossible, for a foreign company like Apple to compete in China in these aspects despite its collaboration with UnionPay," he wrote in an e-mail to the Global Times on Thursday.

"Payment is already allowed through Alipay and Tenpay here, but it's not impossible for our restaurant to install another POS device for Apple Pay," a Shanghai-based restaurant manager surnamed Yao told the Global Times on Thursday.

Retail chains 7-Eleven, Carrefour, KFC, Mcdonald's and Mannings accept Apple Pay.

Domestic online booking and discount platform operator Meituan-Dianping will also support the use of Apple Pay, the company announced in a statement sent to the Global Times.

Nevertheless, Li said Apple Pay may pave the way for future businesses in China, such as getting a third-party payment license from the central bank.



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