Apple Pay launches in China

Apple faces domestic competition from Alibaba and Tencent as it launches Apple Pay in China.

China is one of Apple’s most lucrative markets outside of the United States, but it enters the country as a latecomer with its mobile payment system.

Bessie Lee, founder and chief executive officer, withinlink, says Apple Pay’s entry into the China market this week is good news for iPhone users but it’s too early to tell how well the service will be received there.

One of Apple’s biggest challenges will be competition from an already well-established mobile payments market.

Existing players include Alibaba’s Alipay and Tencent’s Tenpay, which combined hold almost 70% of China’s mobile payment market. This iResearch pie chart shows a breakdown of the country’s mobile payments market.

Apple Pay China_iResearch Mobile Payments Graph

Another obstacle is while Apple Pay works on iPhone 6 models and above, Alipay and WeChat Wallet can be downloaded on most iOS and Android operating systems.

WeChat has 650 million monthly active users, and more than 200 million of those accounts are linked to its payment platform. With hong bao marketing over the Chinese new year, those numbers have likely grown as more of the social messaging app’s users see the value in adding payment to WeChat’s existing services.

Alipay has 400 million users.

Hardware requirements on the retail/merchant side require POS machines that are NFC enabled to transact with Apple Pay.  WeChat Wallet and Alipay on the other hand, can be transacted using the bar code scanners used by most cash registers. As we have written in previous stories on WeChat Wallet, payment can also be transacted between user and vendor accounts without the need to scan at all.

Lee points out that for convenience sake, WeChat and Alipay users are likely to stay with these two payment systems for ease of convenience – the payment system is part of an existing app they are already using everyday.

Apple Pay’s immediate opportunities with Chinese consumers will be those outside of China, says Lee.

There are now more than 120 million Chinese traveling overseas. Mobile payments for these travellers will be easier for them as Apple Pay continues to increase its international presence.

Apple Pay China_figure-1-payment-sheet-cn_2x_300

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