Chinese Apple Pay launch in limbo as iOS 8.3 fails to deliver expected UnionPay support
Negotiations between Apple and China's state-owned credit and debit card processor UnionPay to launch Apple Pay services have hit a wall, according to a report on Monday, suggesting iPhone 6 owners in the region may not be able to use Apple's mobile payments service anytime soon.
Citing sources close to ongoing talks, MarketWatch reports Apple and UnionPay have not yet reached an accord on how Apple Pay will roll out in China, a feature expected to debut with iOS 8.3 last week.
The publication previously pegged Apple's NFC-based service to launch in March, but later said talks with UnionPay stalled. As of today, a rollout timeline does not exist, the report said.
Apple has little choice but to move through UnionPay, as the company handles all interbank transactions in mainland China. For example, both China Mobile and China Unicom field NFC payment services, but each system links with UnionPay to transfer money from customer bank accounts.
In addition to UnionPay, sources claim Apple engaged in talks with eight major Chinese banks last year, but those discussions also failed to pan out. Along with technical hurdles, Apple's fees are thought to be a major obstacle to obtaining Chinese ratification. In the U.S., Apple takes 0.15 percent of a 2 percent per-payment merchant fee, plus a half-cent per-transaction charge. Chinese banks are reportedly reluctant to cede such high percentages to Apple.
With iPhone 6 and 6 Plus selling in record numbers, Apple is looking to expand support for its branded touchless payments service beyond U.S. borders, though negotiations have yet to bear fruit. Reports in December said Apple was discussing options to release a UK version of Apple Pay in early 2015, but that timeline has been pushed back as talks with local banks continue.
Citing sources close to ongoing talks, MarketWatch reports Apple and UnionPay have not yet reached an accord on how Apple Pay will roll out in China, a feature expected to debut with iOS 8.3 last week.
The publication previously pegged Apple's NFC-based service to launch in March, but later said talks with UnionPay stalled. As of today, a rollout timeline does not exist, the report said.
Apple has little choice but to move through UnionPay, as the company handles all interbank transactions in mainland China. For example, both China Mobile and China Unicom field NFC payment services, but each system links with UnionPay to transfer money from customer bank accounts.
In addition to UnionPay, sources claim Apple engaged in talks with eight major Chinese banks last year, but those discussions also failed to pan out. Along with technical hurdles, Apple's fees are thought to be a major obstacle to obtaining Chinese ratification. In the U.S., Apple takes 0.15 percent of a 2 percent per-payment merchant fee, plus a half-cent per-transaction charge. Chinese banks are reportedly reluctant to cede such high percentages to Apple.
With iPhone 6 and 6 Plus selling in record numbers, Apple is looking to expand support for its branded touchless payments service beyond U.S. borders, though negotiations have yet to bear fruit. Reports in December said Apple was discussing options to release a UK version of Apple Pay in early 2015, but that timeline has been pushed back as talks with local banks continue.
Comments
If anything, I think we'll see Australia/Canada/UK/Sweden/Germany before we see China. These four regions are much further ahead with both wireless and tokenisation plans.
The delay for Apple Pay is not Apple, and unfortunately there isn't too much that Apple can do at this stage. Apple pay launched the *same month* tokenisation became available in the USA.
If anything, I think we'll see Australia/Canada/UK/Sweden/Germany before we see China. These four regions are much further ahead with both wireless and tokenisation plans.
4 of the top 5 card issuers are in China. On the other hand, Germany has one of the lowest payment card use rates in the West, and out of those, the majority is Girocard.
Apple continues to negotiate with Union Pay. China has a monopoly on credit card use. So Apple continues to negotiate.
If anything, it will be the growth of Apple marketshare with the wealthy in China that is going to pressure Union Pay to allow Apple Pay.
And China's affluent class buys a third of all the luxury goods in the world.
They only buy iPhones.
It would be a loss of face to buy something signaling cheapness as an Android phone.
So as the iPhone is used by more and more of China's affluent, it will be a weight that Union Pay cannot ignore.
In the U.S., Apple takes 0.15 percent of a 2 percent per-payment merchant fee, plus a half-cent per-transaction charge. Chinese banks are reportedly reluctant to cede such high percentages to Apple.
What is the regular merchant fee in China? Do they even charge a fee to its citizens, or is it a matter of the Chinese government not wanting Apple (or any foreign company) to have that kind of monetary access to the Chinese people?
What really pi$$es me off about the Chinese government is their refusal to allow foreign companies access to its market, or make it hugely difficult to the point of folks giving up, or having to hand over IP in the name of "national security". I thought the point of being in the WTO is adhering to a set of rules to allow equal access to each other's market? China's arrogance and abuse of the WTO should have booted them out ages ago. The WTO has shown zero cajones in dealing with China. China knows it can get away with it knowing that the global economy wants their $30 microwave ovens.
Enough is enough. Jettison China out of the WTO like a bad habit.
If anything, I think we'll see Australia/Canada/UK/Sweden/Germany before we see China.
I hope so. I'm itching to use it.
China also has their own payment systems in place that make it very easy to transfer money from one individual to another.
I do not recall an official Apple announcement saying this. Am I mistaken or has MarketWatch fabricated an Apple announcement to push its story around the globe? And, are AppleInsider and other sites once again pushing fabrication as truth?
I suspect your 'maybe' is a 'given' ...
This is no big problems because we have several NFC payment and IM based payment options that run on iOS.
I think it will take time to get Union Pay, not because of the Union Pay clearing house but because of the member banks, some of which may not agree with terms proposed by Union Pay.
What is the regular merchant fee in China? Do they even charge a fee to its citizens, or is it a matter of the Chinese government not wanting Apple (or any foreign company) to have that kind of monetary access to the Chinese people?
What really pi$$es me off about the Chinese government is their refusal to allow foreign companies access to its market, or make it hugely difficult to the point of folks giving up, or having to hand over IP in the name of "national security". I thought the point of being in the WTO is adhering to a set of rules to allow equal access to each other's market? China's arrogance and abuse of the WTO should have booted them out ages ago. The WTO has shown zero cajones in dealing with China. China knows it can get away with it knowing that the global economy wants their $30 microwave ovens.
Enough is enough. Jettison China out of the WTO like a bad habit.
You seem to be suffering an episode of extreme anti-Chinese hatred based on your own lack of information.
I suggest you take some headache medicine and sleep it off. When you don't know the answer to something I suggest you seek more information before you press the red button that make your head explode into ten thousand pieces.
I can help:
Union Pay in a credit clearing house such as Visa and Master Card with hundreds of banks to deal with.
Before roll-out of Apple Pay, Apple was primarily focused on Visa and MC, and has been negotiating with them for years. They only started to negotiate with Union Pay last summer. It will take time.
Meanwhile we Chinese have several NFC and IM based payment options but these are more like Pay Pal, where users will register their bank account directly to it rather than a credit card account, because, actually, many Chinese prefer to pay direct with electronic (or real) cash since the transaction fees are very small and no interest charges.
It is only an affluent minority of Chinese that regularly use Credit Cards, including Visa and Master Card (yes, we have that so you can calm down and not kick us out of the WTO, Rich Chinese paying the same ridiculous finance charges to the same American companies).
By the way, China is Apple's largest manufacturing base and it's second largest market, so I'll just guess Tim Cook would not lobby the WTO to kick China out.
China absolutely should've been booted out of the WTO for their rampant IP theft, product dumping, closed markets, currency manipulation and more. It has nothing to do with being anti-Chinese. They compete unfairly at every level due to their own government's policies.
And you sir suffer from two issues... The first is a lack of reading comprehension skills. Not one time in my post did I express any "anti-Chinese hatred". I specifically mentioned "The Chinese Government", not its people.
Second, you becoming defensive at my political criticism of the Chinese government's breaking of every WTO rule and trying to pass it off as some nonesense anti-Chinese sentiment just shows you are either ignorant, or want to keep the status-quo.
China should be booted out of the WTO for a multitude of reasons. China needs us as much as we need them, and the Chinese government needs to be taught a little lesson in humility to clean up its act. Corrupt government. It's people deserve better.
well, Apple could sign a deal with Visa, or Master Card first to enable Apple Pay in China and put more pressure on Union Pay.
Except all Visa and Mastercard accounts in China must be denominated in US dollars. The Government has given UnionPay a monopoly on domestic cards.
Source?
http://knowledge.ckgsb.edu.cn/2015/03/31/finance-and-investment/wholl-win-visa-and-mastercard-versus-unionpay/
Thanks.