China UnionPay: Apple Pay to be available in China from this week

Apple has confirmed that its alliance with China's state-owned bankcard association, China UnionPay, will allow the lender's cardholders to use Apple Pay from this week.

The union between Apple and UnionPay was announced late last year, but was subject to various approvals.

 

Shoppers around the world are being encouraged to use smartphones instead of cards to pay for in-store purchases.

Alibaba's Alipay currently dominates China's electronic payments market.

Apple confirmed its expansion into China on its website.

"You can now support Apple Pay for your customers in China, providing an easy, secure, and private way for them to pay using their China UnionPay credit and debit cards," the firm said. 

Apple's head Tim Cook later announced the launch of Apple Pay in China early on Thursday via his Weibo account.

Several reports have indicated that as many as 20 China-based lenders will be supporting Apple Pay, including the Industrial and Commercial Bank of China (ICBC).

ICBC had not responded to written inquiries on Thursday, however.

 

Growing market

There has been a rapid take-up of smartphones in China, with an estimated 68% of the population now owning one - and digital wallets are becoming a more popular way to pay for goods and services.

UnionPay's alliance with Apple is an extension of its plans to make the most of that growing market. 

However, analyst Bryan Ma of research firm IDC told the BBC that Apple was likely to garner a smaller user base in China compared to competitors like AliPay and Tencent's WeChat Payment. 

"This is in part because Alibaba and Tencent payment systems are used for more things, like money transfers, whereas Apple Pay might be limited to just retail point-of-sale and possibly App Store transactions for now," he explained.

"There will be a natural, gravitational pull though for some people to Apple Pay - particularly people in big cities - because of Apple's brand. So they will be able to attract a selected customer base that way."

Mr Ma said another issue was that Apple Pay would use the Near Field Communication (NFC) method of contactless communication, rather than the barcode-like method of electronic payments using QR codes.

 

QR codes were widely used by Apple Pay's China-based competitors like Alipay, Mr Ma said, and could reach a wider market because more phones could read them compared to phones that could read NFC tags.

By 2017 it is estimated the global mobile payments market will be worth some $1tn (£650bn).

In addition to Apple Pay, Google's Android Pay is available at more than one million locations in the US, while Samsung Pay was launched in South Korea in August, followed by a launch in the US the following month.