Ap­ple Pay pre­pares for de­but in China: ICBC

China Daily (Canada) - - ACROSS AMERICAS - By PAUL WELITZKIN in New York paulwelitzkin@chi­nadai­lyusa.com

Ap­ple Inc’s mo­bile pay­ment sys­tem will start in China on Thurs­day for cus­tomers of the In­dus­trial and Com­mer­cial Bank of China Ltd (ICBC), the world’s largest bank in terms of to­tal as­sets, ac­cord­ing to on­line posts from the bank.

China would rep­re­sent the fifth coun­try Ap­ple in which has de­ployed its pay­ment sys­tem. Ap­ple didn’t re­spond to a China Daily re­quest for com­ment on Tues­day.

Ap­ple said in De­cem­ber that it would launch the wire­less pay­ment busi­ness in China part­ner­ing with the na­tion’s No 1 bank card as­so­ci­a­tion, China Union Pay.

China is the world’s big­gest smart­phone mar­ket. At the end of last year, 358 mil­lion peo­ple — more than the pop­u­la­tion of the United States — were pay­ing by mo­bile phone, ac­cord­ing to the China In­ter­net Net­work In­for­ma­tion Cen­ter.

For Ap­ple Pay to gain sig­nif­i­cant trac­tion in a new mar­ket it should have a range of part­ners, Jack Kent, mo­bile pay­ment an­a­lyst for IHS in Lon­don, said in an e-mail.

“The Chi­nese mar­ket al­ready has a num­ber of dif­fer­ent mo­bile pay­ment op­tions, but it is im­por­tant to re­mem­ber that Ap­ple doesn’t need to su­per­sede them to suc­ceed. Ap­ple Pay helps Ap­ple tie peo­ple into its devices and ser­vices ecosys­tem and ul­ti­mately to sell more Ap­ple prod­ucts — if the launch of Ap­ple Pay en­sures its cus­tomers con­tinue to buy its prod­ucts, Ap­ple will have suc­ceeded,” said Kent.

“China is a crit­i­cal mar­ket for Ap­ple, and a key rea­son why it has pri­or­i­tized this ge­og­ra­phy for de­ploy­ment of Ap­ple Pay. Ap­ple Pay is in­tended to cre­ate a deeper re­liance on and re­la­tion­ship with the de­vice. The goal is to deeply en­grain the iPhone into the user’s daily life to cre­ate lock-in and loy­alty,” com­mented Jor­dan Mc­Kee, a mo­bile pay­ment an­a­lyst with 451 Re­search in Bos­ton in an e-mail.

In­stead of scan­ning a bar code, Ap­ple Pay users will uti­lize what is called near-field com­mu­ni­ca­tion tech­nol­ogy (NFC). Mc­Kee said that Ap­ple Pay’s en­try in China would mark the first large-scale NFC wal­let de­ploy­ment within the coun­try.

“China is no stranger to mo­bile pay­ments, how­ever, with Ali­pay (Alibaba’s on­line pay­ment plat­form) and Ten­pay (A Chi­nese ver­sion of PayPal) ex­pe­ri­enc­ing ex­plo­sive growth and com­mand­ing an ef­fec­tive lock on the mar­ket, Ap­ple Pay’s prospects for dis­plac­ing th­ese ser­vices out­right are slim, given their per­va­sive role in Chi­nese con­sumers’ fi­nan­cial and so­cial lives,” said Mc­Kee.

Mc­Kee said Ali­pay and Ten­pay’s suc­cess is in­dexed to mul­ti­ple fac­tors, not the least of which is their fo­cus on the broader com­merce jour­ney. “Ap­ple would be wise to ex­plore part­ner­ship op­por­tu­ni­ties with both in an ef­fort to ride on the coat­tails of their spik­ing tra­jec­tory,” he added.

Li Chao, a Bei­jing based an­a­lyst from iRe­search Con­sult­ing Group, said Ap­ple Pay will help open up the Chi­nese smart­phone pay­ment mar­ket, where e-com­merce gi­ant Alibaba now con­trols the lion’s share.

“It will be dif­fi­cult for Ap­ple Pay to chal­lenge Alibaba’s pay­ment ser­vices in the short run, but the avail­abil­ity of Ap­ple Pay will cer­tainly at­tract more peo­ple pay­ing at the coun­ters with smart­phones in­stead of reach­ing for their wal­let,” Li said.

It will be dif­fi­cult for Ap­ple Pay to chal­lenge Alibaba’s pay­ment ser­vices in the short run.”

Gao Yuan con­trib­uted to this story.

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