Approach, range of partners will determine success for U.S. tech giant
Several media reports this week have indicated that Apply Pay, which enables iPhone users to make payments simply by using their phones, will be available in the Chinese mainland in the pre-dawn hours of Thursday.
Experts said on Tuesday that the content of the cooperation deal Apple Inc will announce could determine whether Apple can edge into China's hotly contested mobile payment market.
In December 2015, Apple and China UnionPay announced a partnership to bring the digital wallet system to China, but they didn't say when that would happen.
Media reports late Monday, however, said the exact time will be 5 am Thursday Beijing time.
Apple and China UnionPay, a Shanghai-based national bank card association, declined to comment as of the press time Tuesday.
"The Apple brand has a large loyal user base among China's burgeoning middle class, and their deep pockets could help Apple make profits from its payment service," Zheng Chunhui, an industry analyst with Beijing-based market consultancy Sootoo, told the Global Times Tuesday.
But whether Apple Pay can make its mark in the intensely competitive Chinese mobile payment market depends on whether Apple can line up a wide range of partners, Zheng said.
Globally, Apple's iPhones use near field communication (NFC) technology and Touch ID fingerprint recognition technology to achieve contactless payment.
In China, the more established payment method is via scanning QR codes, a type of matrix bar code that is generated by payment software on the screens of users' smartphones.
Alipay, developed by Chinese e-commerce giant Alibaba Group Holding, and Internet giant Tencent Holdings' payment service WeChat Wallet have been evolving since 2013. These mobile payment platforms began to reach out to brick-and-mortar stores in 2015 in a drive to bridge online and offline services.
Chinese consumers really got into the habit of scanning QR codes to complete their payments in 2015 as China's Internet giants spent billions of yuan on promotions. Data released by Beijing-based market research firm BigData-Research released in January showed that Alipay accounted for 72.9 percent of China's mobile -payment market.
Alibaba, Tencent and Chinese search giant Baidu Inc, which offers the Baidu Wallet payment service, all declined to comment on the looming arrival of Apple Pay.
While many of the latest-model iPhones have built-in NFC hardware, the function cannot be utilized for the moment in the mainland, experts said.
Analysts say they are not sure on whether Apple can tap into China's online marketplaces, such as Alibaba's tmall.com and taobao.com as well as jd.com which is backed by Tencent.
Li Chao, an analyst at Beijing-based iResearch Consulting Group, said the type of payment approach that Apple chooses will determine whether Apple Pay is widely accepted in China.
If Apple chooses the QR code scanning model, customers won't be impressed, Li said.
Other factors include the range of Apple's cooperating banks and retailers - from restaurants to convenience stores and from supermarkets to large shopping malls - and the availability of offline point-of-sale machines that work with the iPhone's NFC function, Li said.
"In terms of Internet awareness and the acceptance level of mobile payments, China beats the U.S., where a very advanced credit card industry has a firmer hold on consumers' habits," Li told the Global Times Tuesday.
For the moment, Apple Pay generates just a tiny portion of Apple's revenues, analysts said.
Although the revenue won't be significant at the beginning, the commissioning of the service has strategic implications, because its convenience will bring more customers into the Apple ecosystem, experts said.
