Apple is looking to enter the highly competitive electronic-payments market in China by February 2016, according to several reports.
Technode reported in September that Apple registered a local entity called Apple Technical Service Shanghai Ltd (苹果技术服务 [上海] 有限公司) which would oversee the development of Apple Pay in China.
At the time the entity listed Gary Joseph Wipfler as legal representative. Wipfler currently serves as vice president and corporate treasurer for Apple. The established company reportedly registered capital worth $13.4 million USD.
According to sources who spoke to the Wall Street Journal, Apple has already forged relationships with China’s four major banks, as well as possibly Union Pay, the current market leader in credit and debit payments.
Earlier in the year Apple’s Tim Cook told state media outlet Xinhua that he was “bullish” on introducing Apple Pay to China. The country already hosts a series of local payment options, most notably Alipay, the payment brand of Alibaba’s finance unit Ant Financial.
Like Apple Pay, Alipay has excelled as a mobile payment method, allowing users to spend at a host of brick and mortar stores using queues from QR codes that interact with Alipay’s wallet system, linked to bank accounts and debit cards. Apple Pay uses a near field communication antenna embedded within the iPhone 6 itself to communicate with specialized terminals.
Apple Pay’s experience will be vastly different in China than in their home market. Penetration rates for credit cards remain low in China, while debit card-linked digital wallet systems have excelled in the absence of other methods. The Apple Pay system favors users of multiple cards.
Alipay dominates the payment market across online platforms, O2O apps and brick and mortar stores. A much larger percentage of China’s consumers also still use Android phones, which could constrict Apple Pay and related hardware to first tier cities.