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Apple, Samsung challenge Alipay

News, 21 December 2015

BEIJING: Alibaba's Alipay currently dominates China's electronic payments market, but the Chinese e-commerce giant is now facing a fresh challenge from tech rivals Apple and Samsung.

US technology company Apple announced that it is joining forces with China UnionPay, the state-owned bankcard association that has issued five billion cards to date.

Subject to regulatory approval, Apple said its Apple Pay system will roll out as soon as early 2016 in China, and that 15 leading Chinese banks have agreed to make their systems compatible.

"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," said Eddy Cue, Apple's svp of internet software and services.

Chai Hongfeng, executive vice president of China UnionPay, said the company is dedicated to providing "secure, convenient mobile payment experiences for its hundreds of millions of cardholders".

"We're very excited to offer Apple Pay among a diverse set of innovative payment options that work with China UnionPay QuickPass," he said.

Following quickly after Apple's announcement, South Korean tech giant Samsung said that it too had reached agreement with China UnionPay over support for its Samsung Pay technology, the International Business Times reported.

Both companies clearly see opportunities in China where the central bank has calculated that the nation's mobile payment transactions grew 134% to 22.6 trillion yuan ($3.6 trillion) in 2014.

However, they will face an uphill struggle because of the dominance of Alibaba and other domestic players, according to Mark Natkin of Marbridge Consulting in Beijing, in comments to the Financial Times.

Alibaba's Alipay service is thought to account for at least 70% of China's mobile payments market, while Tencent's Tenpay platform has up to 19%, with Baidu also a recent entrant.

"They are coming into a market where there are two extremely strong incumbents and a third very strong local company that is making headway," Natkin said. "For Apple to gain traction here – it won't be impossible, but it will be very challenging."

Data sourced from Apple, International Business Times, Bloomberg, Financial Times; additional content by Warc staff