Apple Pay in China in partnership with UnionPay

Taken from Business Insider Intelligence article
US MOBILE PAYMENT HEAVYWEIGHTS ENTER CHINA

Apple announced plans to launch Apple Pay in China in partnership with UnionPay, the country’s largest interbank processor and card network, as well as with 15 local banks. UnionPay cardholders will be able to add their bank cards to Apple Pay and use the service to make payments via all eligible Apple devices. The partnership will likely begin in early 2016, pending testing and security certification from Chinese regulators.

Earlier in December, UnionPay also announced a proprietary HCE-based mobile wallet for Android customers. And last week, Samsung signed a similar agreement with UnionPay that will give cardholders access to Samsung's wallet. 

Securing the partnership with UnionPay was critical for Apple Pay, given that the card network holds a near-monopoly over China's card ecosystem. Though the country is beginning to open up its processing ecosystem to global networks like Visa, MasterCard, and Amex, UnionPay still handles the vast majority of card transactions in China. And it has a wide reach — the network has issued over 5 billion cards, which are accepted at 26 million merchants and 1.9 million ATMs. 

Apple and Samsung will help bolster an already thriving mobile payments market.

Two third-party players compose the majority of the mobile payments market. Alibaba’s Alipay and Tencent’s Tenpay, both of which are available for iOS and Android users, comprise over 90% of the mobile payments market. That means that in order for operating system-based wallets like Apple Pay to succeed in China, they'll either need to give users a compelling reason to switch mobile wallets, or partner with mobile wallet providers so that they don't have to. And the latter is likely, given that Alibaba CEO Jack Ma has noted on multiple occasions that he's interested in developing a partnership between Alipay and Apple. And those apps are more universally accepted than the new products. That’s because Alipay and Tenpay are barcode-based, which means customers can pay with them at any merchant with a handheld scanner. Apple Pay is NFC-based, which means it's only compatible with NFC-enabled “QuickPass” UnionPay terminals. There are reportedly 5 million of these terminals in China, but that’s a small fraction of the places that accept Alipay and Tenpay, according to The Wall Street Journal