Lei Xiangping

    lagon235@163.com

    ON Feb. 18, Apple launched its mobile payment platform Apple Pay in China. On debut day, over 38 million Chinese iPhone users registered the tool, with nearly 80,000 bank cards bound to Apple Pay per minute.

    Many people rushed to experience Apple Pay’s idiot-proof functions — users can scan bank cards and type in a verification code to easily bind their cards and they only need to unlock their iPhones to receive wireless POS (point of sale) machine signals to finish paying in a second.

    Unlike Alibaba’s Alipay and its counterpart Tencent’s Tenpay, which rely on Internet access to start apps and scan QR codes, Apple Pay has an unparalleled trait: employing Near Field Communication technology. NFC helps Apple Pay copy a substitute virtual card into an iPhone after binding and then users can swipe the virtual card to pay without accessing the Internet, which is more efficient and safer than Alipay and Tenpay.

    By cooperating with UnionPay, China’s most-used bank card payment network, Apple Pay’s entrance was highly anticipated by some industry observers who ascertain that it will become a competitive player in domestic mobile payment market and bite into the dominant market share occupied by Tenpay and Alipay. However, the belief that Apple Pay’s debut will reshuffle China’s current mobile payment market and disrupt the status quo is either a misrepresentation of reality or wishful thinking.

    Following Apple Pay, Google Pay and Samsung Pay are also well-prepared to enter China in the form of joining hands with UnionPay. Involvement of many more newcomers will intensify competition, but potential growth is limited. Because Apple Pay only works on Apple Watch, the iPhone 6 and newer devices — there are only around 84 million of these devices in use in China, not enough to overwhelm the gigantic number of active Alipay and Tenpay users.

    Meanwhile, Chinese customers have gotten used to Alipay and Tenpay, and their mobile consumption experience has been shaped by the two. Convincing Chinese users to switch to a new system will not happen easily. The latest data by China’s central bank shows that 70 percent of the 85 trillion yuan (US$1.3 trillion) paid via mobile phones was via Alipay and Tenpay in the first three quarters of 2015. As the market continues to grow, the user base of the two dominators will continue to increase.

    One compelling reason to be optimistic about the future of Apple Pay in China is the seemingly win-win bond between Apple Inc. and UnionPay, which indeed has contributed greatly to Apple Pay’s short-term success. Nevertheless, how the bond will benefit the two in the long term remains to be seen.

    As a hardware manufacturer, Apple has limited resources to tap the mobile payment market, hence having to rely on UnionPay’s extensive POS machine network and intimate relationship with domestic banks. As for UnionPay, which launched its own version of the NFC mobile payment platform Quick Pass last December to resist the prevailing offensive by Alipay and Tenpay, the company has been increasingly losing its own battleground in the offline payment sector. So uniting with Apple Pay might help Quick Pass gain in popularity.

    Frankly speaking, this bond is a temporary expediency, not strong enough to dethrone Alipay and Tenpay, because both UnionPay and Apple have their own unspoken impetus. On one hand, given that iPhone sales in China have shrunk, some telecommunication experts predict that the real reason Apple launched Apple Pay was not promote its mobile payment tool, but to ratchet up declining iPhone sales. When Apple focuses on increasing its phone sales, its investment in mobile payments can’t be overestimated.

    On the other hand, UnionPay’s real purpose is to join hands with Apple Pay to compete with Alipay and Tenpay. But learning from the big dogs won’t guarantee that UnionPay will automatically become a big dog too. Because UnionPay’s payment interface is not user-friendly, UnionPay has lagged behind in spite of its technological advantages. With the help of Apple Pay, UnionPay might prioritize its service standard and expand its user base quickly, but the changing market won’t give it enough time to mend its mistakes. By the time UnionPay catches up, Alipay and Tenpay will still be much further ahead.

    All in all, Apple Pay won’t change the basic status quo of China’s mobile payment market in the short term, but its avant-garde, safe and efficient paying method has intrigued millions of Chinese customers and encouraged them to broaden their horizon in a way that even Alipay and Tenpay are envious of. The dominance of Alipay and Tenpay will continue, but the process of satisfying customers’ needs by constantly improving technology is endless.

    (The author is a News Desk editor with China Radio International.)