Apple (News - Alert) Pay may has already made a lot of headway when it comes to businesses that are willing to put its systems to use. Thanks to a combination of high ease-of-use and a huge market base, it's clear Apple Pay has a lot of growth potential on top of what it's already shown, but that's not the case everywhere. The Chinese market is proving to be a tough nut for Apple to crack, and for several reasons. Recent reports suggest that there may be an even longer wait ahead for Apple users in the country.
The new reports suggest that the newest update to iOS in China doesn't offer support for bank cards from UnionPay. This might not sound like much of a problem, but UnionPay is the only company in China that handles interbank payments, which means much of the system that Apple Pay would need to run on is, currently, off limits. Reports from UnionPay employees suggest that the situation may not be resolved swiftly, either, thanks to no agreements being reached and no timetable set to actually reach agreements in the future.
But some other reports suggest that there may be two particular issues holding up the works for Apple Pay to make a broad sweep into China: one a matter of support, and the other a matter of policy. Apple Pay doesn't seem to be compliant with a major Chinese central bank rule requiring electronic payment systems to support the standard known as PBOC 3.0. Apple has been in contact with UnionPay since 2014, so fixing that particular issue may not be too difficult. There's a second point, however, that could be really gumming up the works: Apple Pay takes around 0.15 percent of every transaction that goes through its systems, and the Chinese banks are said to be balking at this number.
Generally, Apple has the market clout to get what it wants when it makes such propositions due to the sheer size of its install base and its name recognition factors. However, this time around, the shoe may be on the other foot thanks to the incredibly large size of the Chinese market. Apple may well decide that it's better to get, say, 0.05 percent of the transactions than to get 0.15 percent of nothing at all.
Another point that needs to be considered is that, as far as the Chinese mobile payment market goes, Apple is very much late to the party. There are several established, entrenched options already in play in the field, and Chinese banks will therefore have a bit more leverage, sticking with established deals to turn profit in the sector rather than bringing in a newcomer under less-than-favorable terms.
This may well be a situation in which the banks, backed up by government policies, entrenched positions and a huge market base in the offering, have more leverage than Apple does. Even if Apple can get in, it's still likely to have an uphill battle on its hands thanks to the arrival of alternatives like Samsung (News - Alert) Pay and Android Pay, developments that may stymie Apple in the first place thanks to Android (News - Alert) market penetration.
It's a situation that will likely take some time to play out, and the resolution is at best unclear. But there's going to be a lot to watch for in the coming days, and the end result may look nothing like anything we've ever seen before.
Edited by Dominick Sorrentino
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