Apple launches China payments service in crowded market
Apple on Thursday launched its mobile payment service Apple Pay in China, 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.
But unlike most other countries, mobile payment systems are already well-established in China and 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 a verified China microblog.
Some users complained of difficulties linking their bank cards, the key step to using the payment service, apparently because people rushed to sign up.
“Apple Pay, I have already waited a long time for you in vain. But your back-end technology basically cannot survive in this hot spot China,” said one in a microblog posting under the name Erzi Wangpeng.
China had 359 million online payment users in mid-2015, up almost 18 percent in six months, according to the state-backed China Internet Network Information Center (CNNIC).
China’s mobile transactions were valued at some 9.3 trillion yuan ($1.4 trillion) last year, up an annual 57 percent, one industry estimate showed.
The dominant mobile and online payment providers are e-commerce giant Alibaba with nearly three-quarters of the market, followed by Tencent — operator of the popular messaging app WeChat — which has some 17 percent, according to Beijing-based BigData Research.
The Apple brand commands a strong following in China, especially as a status symbol among the emerging middle class, with reports circulating of people selling their kidneys to buy iPhones in recent years.
– Intense competition –
Ray Zhao, an Internet industry analyst at Guotai Junan Securities, told AFP: “There is still a chance for Apple Pay to grab some market share. Some loyal Apple users may prefer using it instead of other payment tools.
“But the space for Apple Pay is still small,” he added.
Analysts said Apple’s iOS system could provide better security for transactions, but most Chinese people use Android phones, ruling them out as Apple Pay users.
Tencent and Alibaba’s Alipay squared off during the recent Lunar New Year, encouraging users to send billions of “red envelopes” — cash gifts traditionally exchanged over the holiday — online.
Just two days ahead of the Apple Pay launch, Tencent said it would start levying fees for withdrawing funds from its WeChat Wallet, according to a statement, apparently a move to discourage users from leaving. Rival Alipay said it would not charge.
Apple has found a powerful partner in China, bank card provider UnionPay, which has links to the central bank but has lagged technology companies in developing online payments, analysts said.
“Apple Pay needs to find the right angle to get into the market and it is not as easy as imagined,” independent technology analyst Fu Liang told AFP. “China’s market competition is very intense and there are at least a dozen strong players.”
“But the market space is big enough… It won’t be dominated by only a few players,” he said.