In June, Apple registered an entity in the Shanghai free-trade zone named Apple Technology Service Ltd., according to reports from state-owned media cited by the Wall Street Journal. Sources told The Wall Street Journal that although no timeline or launch-date has been set yet, it’s likely that the entity, which already has $13.4 million in capital from Apple’s Singaporean arm, was formed to bring Apple Pay to the country.
China is a mature market for mobile payments. Consumers regularly use mobile wallets for everyday purchases like groceries and taxi rides. Alipay, Alibaba’s digital wallet, counts 400 million registered users, 80% of whom are on mobile. Tenpay, a mobile wallet run by messaging giant Tencent, counts another high number of users.
China’s payments ecosystem is unique. There are two factors in particular that could pose some new challenges for Apple with regards to mobile wallets:
Apple is a little late to the game in China. In the US, Apple Pay was one of the first mobile wallets with a clear shot at achieving serious buy-in from necessary stakeholders. The already-developed market in China could make it harder for Apple to attract new customers, since it would have to make a case for many users to abandon platforms that they’re already familiar with.
China has strict regulations surrounding payments. In February, Apple clashed with UnionPay over regulatory concerns related to Apple Pay and the NFC technology required for merchants to accept it, according to Motley Fool.
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But Apple’s 2015 success in China makes Apple Pay a logical next step:
Growth: Apple’s Q3 earnings report cited that 27% of the company’s $49.6 billion revenue came from China, according to Engadget. That’s nearly double the percentage from one year ago.
Market share: Apple’s iOS controlled 20.1% of China’s installed base of smartphones at the end of Q2 2015, marking a 7 percentage-point increase from Q2 2014.
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