Apple announces Apple Pay partnership with China UnionPay, expects 'early 2016' launch

Posted:
in iPhone edited December 2015
Apple on Thursday announced it has reached an agreement with Chinese bankcard processor UnionPay to offer Apple Pay services in China early next year, opening the iOS-based mobile payments product to an increasingly important -- and vast -- Asian market.




According to Apple, China UnionPay cardholders will be able to add bank cards to Apple Pay on iPhone, Apple Watch and -- for online purchases -- iPad when the service goes live in early 2016. The Chinese bankcard network, which operates the nation's inter-bank clearing and settlement system, has issued 5 billion UnionPay Cards that can be used at more than 26 million merchants and 1.9 million ATMs.

"China UnionPay is dedicated to promoting payment innovations and providing secure, convenient mobile payment experiences for its hundreds of millions of cardholders, aligning multiple parties in the industry," said Chai Hongfeng, executive vice president of China UnionPay. "We're very excited to offer Apple Pay among a diverse set of innovative payment options that work with China UnionPay QuickPass."

UnionPay just this week debuted a version of its QuickPass touchless payments system that supports NFC-equipped smart devices. The system is backed by over 20 commercial banks and compatible with more than 10,000 point of sale terminals spread across mainland China.

Apple was rumored to have reached a preliminary agreement with UnionPay in November, but the companies were reportedly awaiting confirmation of support from card-issuing banks before announcing the partnership.

Apple Pay in China will work identically to existing iterations of the service currently available in the U.S., the UK, Canada and Australia. Apple's system relies on tokenization technology, which uses a unique Device Account Number stored in an onboard Secure Element to generate one-time dynamic security codes on a per-transaction basis.

"Apple Pay has revolutionized the way millions of people pay every day with their iPhone, Apple Watch and iPad," said Eddy Cue, Apple's SVP of Internet Software and Services. "China is an extremely important market for Apple and with China UnionPay and support from 15 of China's leading banks, users will soon have a convenient, private and secure payment experience."

Apple expects the Chinese version of Apple Pay to launch in early 2016 after requiring the requisite certifications and regulatory hurdles. The service is in compliance with China's national mobile payment and financial industry standards, the company said.
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Comments

  • Reply 1 of 30
    And in Cupertino, Eddy's just started playing Pink Floyd's Money on that fancy Phantom speaker set in his office. 
    edited December 2015 fastasleeplostkiwimagman1979jony0
  • Reply 2 of 30
    And this will be good for a drop in the stock tomorrow. 
    jbdragon
  • Reply 3 of 30
    And this will be good for a drop in the stock tomorrow. 
    Value of AAPL cut in half!  /s
    radster360
  • Reply 4 of 30
    First came the 64-bit mobile iOS; on top of that came Touch ID. And the previous two steps facilitated the rollout of Apple Pay. Can't wait to see what comes next (Peer-to-peer money transactions? Apple Bank? One More Thing?)
    Solimagman1979
  • Reply 5 of 30
    calicali Posts: 3,495member
    Holy Cow this sounds HUGE! Am I reading this right? 5 Billion potential cards?
    lostkiwiSolijbdragon
  • Reply 6 of 30
    bobschlobbobschlob Posts: 1,074member
    "Apple expects the Chinese version of Apple Pay to launch in early 2016 after requiring the requisite certifications and regulatory hurdles."
    LOLOLOLOLOLOLOLOLOLOL
  • Reply 7 of 30
    @bobschlob No problem. In China, all you need is some money in the right pockets. No red tapes... :)
    lostkiwi
  • Reply 8 of 30
    This is tremendously huge considering that UnionPay (closely linked to Chinese government?) is surpassing Visa and MasterCard in China in terms of growth. The affluent and middle-class will be empowered to do NFC Touch-ID payments for this in the high-density China cities. Already #2 player, MasterCard is #3.... Apple Pay with the fingerprint touch-ID will add to the cool factor for high-secured payments. Those who haven't been to China cannot relate to the huge spending by the Chinese esp the wealthy (and show-offs). Incredibly good news for Apple and UnionPay !!!
    Soli
  • Reply 9 of 30
    This is huge! All those analyst the busy trying to figure out the complex supply chain issues. This is the Apple Service play, the whole Apple Eco System play. What you are going to see more sale of iPhone 5s and above with touch IDs and I can see more Apple Watch being sold too. Those idiots at Wall Streets never understood Apple and they never will. Apple has always proved Wall Street wrong and constantly challenged their intelligence.
  • Reply 10 of 30
    cali said:
    Holy Cow this sounds HUGE! Am I reading this right? 5 Billion potential cards?
    If pay-by-phone is now a popular thing in greater China, then things have changed radically since last I was there (I'd be surprised, but I don't consider it impossible since the rapid pace of change there has been astounding).
  • Reply 11 of 30
    Apple is very late to the game. Chinese have spent $1.4 Trillion using mobile payment apps in the first 10 months of 2015. Here in China, I have no need for a wallet, as every and any purchase from coffee, taxi fare, lunch, grocery, movie tickets, bullet train tickets, hotel and flight reservations, etc, are all handled on my Alipay App and WeChat on my iPhone. That said, even if Apple Pay can have a tiny slice of the market, then it's still huge business.
  • Reply 12 of 30
    cali said:
    Holy Cow this sounds HUGE! Am I reading this right? 5 Billion potential cards?
    If pay-by-phone is now a popular thing in greater China, then things have changed radically since last I was there (I'd be surprised, but I don't consider it impossible since the rapid pace of change there has been astounding).
    too late, Alibaba's Alipay already dominate mobile payments
    http://qz.com/577375/apple-pay-will-never-match-alipays-popularity-in-china/
    edited December 2015
  • Reply 13 of 30
    cnocbuicnocbui Posts: 3,613member
    So how much did Apple have to come down in the fees they were asking, for this to happen? Australia looks to have become a Google Pay market with several large banks having just adopted it. http://www.smh.com.au/business/banking-and-finance/big-banks-opt-for-android-over-apple-pay-20151215-glo0ts.html I suspect Apple will have to significantly cut the fees it's asking to penetrate markets where NFC payments are already well established.
  • Reply 14 of 30
    According to the Verge, Samsung Pay is coming to UnionPay in 2016 too so this doesn't seem like anything exclusive for Apple.

    http://www.theverge.com/2015/12/18/10526450/samsung-pay-china-unionpay-2016-launch
  • Reply 15 of 30
    cnocbui said:
    So how much did Apple have to come down in the fees they were asking, for this to happen? Australia looks to have become a Google Pay market with several large banks having just adopted it. http://www.smh.com.au/business/banking-and-finance/big-banks-opt-for-android-over-apple-pay-20151215-glo0ts.html I suspect Apple will have to significantly cut the fees it's asking to penetrate markets where NFC payments are already well established.

    If true (which I doubt given any actual evidence), then Australian banks are stupid.

    Why go with a platform where the users spend far less money than iOS? As in 1/3rd. 
  • Reply 16 of 30
     rogifan_old said:
    According to the Verge, Samsung Pay is coming to UnionPay in 2016 too so this doesn't seem like anything exclusive for Apple.

    http://www.theverge.com/2015/12/18/10526450/samsung-pay-china-unionpay-2016-launch

    Except nobody in China owns any Samsung flagship phones. They either buy an iPhone or a Huawei/Xaiomi.
    jbdragon
  • Reply 17 of 30
    gatorguygatorguy Posts: 18,907member
    cnocbui said:
    So how much did Apple have to come down in the fees they were asking, for this to happen? Australia looks to have become a Google Pay market with several large banks having just adopted it. http://www.smh.com.au/business/banking-and-finance/big-banks-opt-for-android-over-apple-pay-20151215-glo0ts.html I suspect Apple will have to significantly cut the fees it's asking to penetrate markets where NFC payments are already well established.

    If true (which I doubt given any actual evidence), then Australian banks are stupid.
    There's good business reasons for it actually. Apple wants the same cut of the interchange fees they get in the US. The problem?  Aussie banks only get roughly half of the fees that US banks get to begin with. Giving Apple the same amount they get in the States makes it excessively expensive for them in their view, too much of the pot being shared, particularly when there's other options.  That's why Apple got essentially zero support from Australian national banks when Apple Pay launched there last month. There's little doubt that Apple had to agree to a smaller take to get into China and may have to do the same in other countries like Australia. 

    http://www.techtimes.com/articles/108498/20151120/apple-pay-launches-in-australia-with-zero-support-from-national-banks.htm
    edited December 2015
  • Reply 18 of 30
    cnocbui said:
    So how much did Apple have to come down in the fees they were asking, for this to happen? Australia looks to have become a Google Pay market with several large banks having just adopted it. http://www.smh.com.au/business/banking-and-finance/big-banks-opt-for-android-over-apple-pay-20151215-glo0ts.html I suspect Apple will have to significantly cut the fees it's asking to penetrate markets where NFC payments are already well established.

    If true (which I doubt given any actual evidence), then Australian banks are stupid.

    Why go with a platform where the users spend far less money than iOS? As in 1/3rd. 
    Because Apple is being greedy and asking for too much of the cut. Apple will have to lower the asking price. 
  • Reply 19 of 30
    cnocbuicnocbui Posts: 3,613member
    cnocbui said:
    So how much did Apple have to come down in the fees they were asking, for this to happen? Australia looks to have become a Google Pay market with several large banks having just adopted it. http://www.smh.com.au/business/banking-and-finance/big-banks-opt-for-android-over-apple-pay-20151215-glo0ts.html I suspect Apple will have to significantly cut the fees it's asking to penetrate markets where NFC payments are already well established.

    If true (which I doubt given any actual evidence), then Australian banks are stupid.

    Why go with a platform where the users spend far less money than iOS? As in 1/3rd. 
    You doubt?  It's all over just about every Australian news outlet.

    "After failing to come to agreement with Apple to enable mobile phone payments, six of Australia’s biggest financial institutions this week signed on with Android Pay. The service will go live in Australia in the first half of 2016."
    http://theconversation.com/google-trumps-apple-for-australian-mobile-payments-but-for-how-long-52429

    Why go with any platform?  Payments using a phone are minuscule in number.  Australia has had contactless payments for years.  You just tap your card against the terminals for low value transactions or do the same and enter your pin hoe larger amounts.  Same in Europe.  Using a phone offers no functional or convenience advantage.  The banks have been processing millions of such transactions annually without paying Apple a cent.  Why would the banks want to pay Apple anything?

    If you want to talk the superiority of platforms, existing cards and payment methods beat phones by billions in terms of transaction value.
  • Reply 20 of 30
    cnocbuicnocbui Posts: 3,613member

    gatorguy said:

    If true (which I doubt given any actual evidence), then Australian banks are stupid.
    There's good business reasons for it actually. Apple wants the same cut of the interchange fees they get in the US. The problem?  Aussie banks only get roughly half of the fees that US banks get to begin with. Giving Apple the same amount they get in the States makes it excessively expensive for them in their view, too much of the pot being shared, particularly when there's other options.  That's why Apple got essentially zero support from Australian national banks when Apple Pay launched there last month. There's little doubt that Apple had to agree to a smaller take to get into China and may have to do the same in other countries like Australia. 

    http://www.techtimes.com/articles/108498/20151120/apple-pay-launches-in-australia-with-zero-support-from-national-banks.htm

    They only got into the  UK by agreeing to  fees that are a fraction of what they get in the US.
    edited December 2015
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