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American multinational technology company, Apple, is set to launch its mobile payment network, Apple Pay, in China on February 18, 2016.
China, with nearly 1.3 billion mobile users, is the second biggest market for Apple Pay to target to date. The California-based company has already obtained support from the country’s largest financial lender, the Industrial and Commercial Bank of China, for its official launch.
Apple believes that the mobile industry in China is growing at a rapid pace due to the explosive increase in the number of mobile broadband (3G and 4G) subscribers since 2014. TechinAsia reports that more than 200 million mobile users registered for mobile broadband services in 2014.
However, internet and mobile experts have begun to question the launch of Apple Pay in China, considering the dominant market share of existing mobile wallet platform, AliPay. Developed and maintained by the country’s largest e-commerce platform, Alibaba, AliPay dominates China’s $200 billion retail market. Alipay has over 300 million registered users, 250 million active monthly users, 100 million daily transactions, and had over 48% of the third-party online payment market in 2013.
Essentially, half of the market the Apple Pay team is targeting is controlled by Alipay, and the rest of it is dominated by major internet service providers such as Tencent. Thus, technology experts are generally treating the launch of Apple Pay in China with skepticism.
Apple Pay was first launched in October 2014 in the United States. However, the highly anticipated debut of the application was unsuccessful to a certain extent, due to the rejection of the payment system by the country’s retail giants, including Walmart and BestBuy. Instead, multi-billion dollar retail companies announced their support for JP Morgan’s ‘Chase Pay’ a year later, because of the premium fees offered by the bank.
"As merchants give us more business, we will give them better pricing,” Gordon Smith, JP Morgan Chase executive, told Reuters in an interview.
At this stage and rate of adoption, it is hard to speculate on the fate of Apple Pay in China, considering the market dominance of existing financial platforms and service providers.
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