China’s UnionPay Co. and Apple Inc. have entered into a preliminary deal that could see the introduction of Apple Pay to China.
UnionPay and Apple in Deal To Introduce Apple Pay to ChinaApple Pay, the mobile-based payment service will be available through UnionPay’s point-of-sales network, according to insider reports.
The two companies are yet to come to a final agreement as they await feedback from partnering banks.
UnionPay, based in Shanghai, is the largest payment and clearing service in the country. The introduction of Apple Pay may come in handy in helping UnionPay and other local banks to stay competitive in light of emerging third-party payment services including Tencent and Alibaba Group.
In China, mobile payment transactions spiked by 134 percent to $3.5 trillion in 2014, according to central bank figures. This offers a lucrative opportunity for foreign companies such as Samsung and Apple to profit from the burgeoning mobile-money transactions.
Through near-field communications technology, Apple Pay users would be able to purchase products and services with their iPhone and Apple Watch at cash registers. The technology will tap into the bankcard information pre-stored in users’ mobile devices to facilitate the transaction.
No agreement yet
However, UnionPay and Apple have not yet signed any agreements with local Chinese banks that would allow bankcards to be linked to Apple Pay.
There are concerns among local banks about the fees Apple Pay would charge and the low number of users utilizing the payment service.
Apple Pay only accounts for just 1 percent of all retail purchases in the US, according to Aite Group, a research company.
The mobile-payment service charges 0.15 percent of the value of the product or service bought, from the 2 percent fee that U.S. merchants pay. In China, such rates would be exceedingly high as merchants generally pay 0.38 percent.
Presently Alibaba’s Alipay owns 83 percent of the third-party mobile payment market while Tencent’s Tenpay owns 10 percent, according to data from market research firm, iResearch.