Apple Pay reportedly faces uphill battle in China as talks with UnionPay stall
According to a report late Monday, Apple is looking to expand Apple Pay operations into China, but the company may face an uphill battle as partnership talks with state-owned credit card operator UnionPay have stalled.
Although Apple Pay is off to a good start in the U.S., the touchless payment system has yet to debut internationally and is facing resistance in the important Chinese market, reports MarketWatch.
An official with the People's Bank of China confirmed that "Apple is seeking to cooperate with Chinese financial institutions" for an Apple Pay introduction, but has not made any concrete deals toward that goal. A major hurdle standing in the way of a Chinese Apple Pay rollout is UnionPay, China's state-owned credit card and debit card system operator. Sources claim talks over a possible agreement, supposedly due for completion by March, have stalled.
UnionPay is a lynchpin in realizing Apple's ambitions in China, as the system exists as the country's only viable processing channel for near-field communication (NFC) payments, the technology used by the iPhone 6 and 6 Plus. Confusing matters are existing NFC payment systems from China Mobile and China Unicom that link with UnionPay to let Chinese consumers pay for goods with money from their bank accounts.
It was rumored in November that Apple and Chinese online retailer Alibaba would strike a deal to bring Apple Pay into China, possibly as part of the firm's branded Alipay NFC solution. At the time, industry watchers speculated that such an agreement could provide an easier path to ratification from Chinese regulators, but a number of obstacles still stand in Apple's way.
Because UnionPay has a monopoly on NFC transactions, it sets usage rates for merchants and could stand in the way of an Apple-Alipay tie up. UnionPay's NFC usage rate "is a heavy price to pay for Alipay. We don't have an offline settlement system, and expensive POS equipment is unaffordable to us," an Alipay source said.
Further, Apple's iPhone-based NFC platform may not qualify for access to Chinese systems that need to incorporate specialized hardware that meets the country's PBOC 3.0 standard. An unnamed source familiar with Apple Pay said the chips used in current iPhone 6 and iPhone 6 Plus devices are not in full compliance with this standard.
Additionally, MarketWatch reports that the Chinese government told Apple it must keep all information related to Chinese Apple Pay customers in a data center located in mainland China. By keeping customer data in-country, the Chinese government is reportedly looking to "prevent data leaks" and hasten repairs in the case of system failure.
Finally, Apple's current U.S. merchant fees of 0.15 percent of a 2 percent fee charged per payment, plus a half-cent per-transaction charge, have been deemed too high for the Chinese market. For example, Alipay charges along the lines of 0.7 percent to 1.2 percent per transaction, meaning Apple Pay may have to settle for a smaller slice of the pie if and when it enters China.
Although Apple Pay is off to a good start in the U.S., the touchless payment system has yet to debut internationally and is facing resistance in the important Chinese market, reports MarketWatch.
An official with the People's Bank of China confirmed that "Apple is seeking to cooperate with Chinese financial institutions" for an Apple Pay introduction, but has not made any concrete deals toward that goal. A major hurdle standing in the way of a Chinese Apple Pay rollout is UnionPay, China's state-owned credit card and debit card system operator. Sources claim talks over a possible agreement, supposedly due for completion by March, have stalled.
UnionPay is a lynchpin in realizing Apple's ambitions in China, as the system exists as the country's only viable processing channel for near-field communication (NFC) payments, the technology used by the iPhone 6 and 6 Plus. Confusing matters are existing NFC payment systems from China Mobile and China Unicom that link with UnionPay to let Chinese consumers pay for goods with money from their bank accounts.
It was rumored in November that Apple and Chinese online retailer Alibaba would strike a deal to bring Apple Pay into China, possibly as part of the firm's branded Alipay NFC solution. At the time, industry watchers speculated that such an agreement could provide an easier path to ratification from Chinese regulators, but a number of obstacles still stand in Apple's way.
Because UnionPay has a monopoly on NFC transactions, it sets usage rates for merchants and could stand in the way of an Apple-Alipay tie up. UnionPay's NFC usage rate "is a heavy price to pay for Alipay. We don't have an offline settlement system, and expensive POS equipment is unaffordable to us," an Alipay source said.
Apple's iPhone-based Apple Pay protocol is not fully compatible with China's PBOC 3.0 security standard, sources said.
Further, Apple's iPhone-based NFC platform may not qualify for access to Chinese systems that need to incorporate specialized hardware that meets the country's PBOC 3.0 standard. An unnamed source familiar with Apple Pay said the chips used in current iPhone 6 and iPhone 6 Plus devices are not in full compliance with this standard.
Additionally, MarketWatch reports that the Chinese government told Apple it must keep all information related to Chinese Apple Pay customers in a data center located in mainland China. By keeping customer data in-country, the Chinese government is reportedly looking to "prevent data leaks" and hasten repairs in the case of system failure.
Finally, Apple's current U.S. merchant fees of 0.15 percent of a 2 percent fee charged per payment, plus a half-cent per-transaction charge, have been deemed too high for the Chinese market. For example, Alipay charges along the lines of 0.7 percent to 1.2 percent per transaction, meaning Apple Pay may have to settle for a smaller slice of the pie if and when it enters China.
Comments
GOOD. DON’T CAVE TO THE COMMIES.
Somehow I don’t think they can spin that positively.
“CurrenC: the premier choice of communists the world over!”
CurrentC is not going to work in China since Google keeps CurrentC data on its own servers, not on Servers in China. Google has no business in China - remember.
"the Chinese government is reportedly looking to "prevent data leaks" and hasten repairs in the case of system failure."
This is where we're supposed to go: BWAHHAHAHA….! Right?
Interesting that ?Pay doesn't meet a security standard. Is there any more info about why it is lacking?
(preferably from sources that don't reduce the problem to "commies")
Oi Apple! UK comes next. That's how it works. US then UK, then commies last.
I personally hope they roll it out to Australia next like they did with iTunes Radio. Although unlike iTunes Radio I hope they don't just stop with Australia and the U.S. Would be happy for them to roll it out in the UK and other countries at the same time as Australia. ;-)
PBOC 3.0 "standards" probably demand a back door and a copy of the code.
Another reason why the Chinese government doesn't care about credit card security... THEY are the ones who are behind most of the hacking, along with groups in Russia! Perhaps if our NSA started to hack and drain all of the banks in Russia and China things would be different.
I hate to break it to you, but according to many I hear speak here in the US, the UK is almost a communist country and the BBC definitely is communist. Yes, I am serous, the venerable BEEB is considered by half of this country as a far left, untrustworthy, science supporting propaganda machine. Ironic considering what they consider 'news'. Hence the continual popping up of extremist right wing rhetoric here on AI and elsewhere in much of America. What is considered centrist in rest of the first world is just 'commie' here, especially in the southern and central States.
Apple wants to play in China it has to conform to what the Chinese government sets down. Now China is such a large part of Apple's revenue will Apple roll over?
Of course they will, they're not Google!
And people here want the government to “own” the Internet so it can be all fair and such. Title II! Title II! Title II! Reasonably priced, fair, regulated to the hilt, innovative, power to the proletariat, soak the bourgeoisie. Mimic the Chinese! Centralized, federal management of the Internet is the only way!
Yes, this is important as China wants to know what you and buying, as part of its national security.... against its citizens policy. And the chip does not comply with china requirements,,,, the back door for chinese govt use is not there.
Such a comic situation. Really.
I hate to break it to you, but according to many I hear speak here in the US, the UK is almost a communist country and the BBC definitely is communist. Yes, I am serous, the venerable BEEB is considered by half of this country as a far left, untrustworthy, science supporting propaganda machine. Ironic considering what they consider 'news'. Hence the continual popping up of extremist right wing rhetoric here on AI and elsewhere in much of America. What is considered centrist in rest of the first world is just 'commie' here, especially in the southern and central States.
The BBC is a scum sucking entity that should just curl up and die IMO. I hate the BBC as much as they hate Jews. Hitler would be proud of them!
You have probably been in Florida too long to notice
The rot started about 10 years ago. Their bias is all about self preservation. A capitalist society has no room for a publicly funded organisation, so they steer the UK into being anti capitalist and anti US. The problem is, the BBC have pretty much a monopoly on news is this dreary country, turning most of the people into jew hating, anti capitalist, US blaming, imbeciles.