Apple Pay prepares for debut in China: ICBC
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.