Payment service represents technological progress: experts
While Apple Pay enjoys increasing popularity in the U.S., it has made only a small dent in the vast Chinese market amid many challenges including low consumer take-up, analysts said Sunday.
Apple Inc launched its mobile payment service in October 2014 in the U.S. It was introduced into China, the world's largest smartphone market, through a partnership with China UnionPay Co on February 18, 2016.
Apple Pay now has a 36 percent acceptance rate from U.S. merchants, up from 16 percent in 2016 and overtaking PayPal (34 percent acceptance rate) to become the No. 1 payment service in the U.S., according to data released by Boston Retail Partners in February.
When the payment service entered China, around 30 percent of Apple users said they would like to use it, domestic financial news portal nbd.com.cn reported Saturday.
For iPhones, Apple Pay only works with the iPhone 6, iPhone 6 Plus, iPhone 6s, or later model.
However, the growth rate of Apple Pay in the domestic market is far below expectations after one year.
"Our store gets hundreds of customers every day and 90 percent of them use domestic mobile payment services like WeChat and Alipay instead of Apple Pay," said an employee surnamed Wang at a supermarket in Beijing's Chaoyang district.
Wang told the Global Times on Sunday that "no more than three payments using Apple Pay in our store each week."
Another employee who declined to be identified and works at a chain bakery in Beijing told the Global Times Sunday that "few customers asked to pay via Apple Pay during the last year."
Also, five small retailers in Beijing that the Global Times talked to on Sunday said that they do not offer Apply Pay in their stores. "(Chinese) Customers are getting used to WeChat's payment function and Alipay, which is quite enough," said a retailer surnamed Yan.
Apple Pay has higher acceptance rate in the U.S. because the payment habit of U.S. consumers evolved from cash to bank cards and then to Apple Pay. For Chinese consumers, third-party payment services were in use before Apple Pay entered the market, Li Chao, an industry analyst at consultancy iResearch Consulting Group, told the Global Times on Sunday.
"Therefore, it's kind of difficult for Chinese consumers to alter their payment habits from WeChat and Alipay to Apple Pay when the user experience of the latter is not any better than that of domestic ones," Li said.
Backed by Alibaba Group Holding, Alipay held the largest market share for payments in the third quarter in 2016, accounting for 50.42 percent of the total, followed by Tencent Holdings-backed Tenpay with 38.12 percent and domestic financial platform lakala.com with 3.32 percent, according to Beijing-based consultancy Analysys.
UnionPay only had 1.08 percent during the same period.
Apple Pay faces intensified competition from its Chinese rivals like Alipay, so it can hardly compete, analysts said.
Wang Xiqiao, a 20-something white-collar worker in Beijing, told the Global Times on Sunday that "although Apple Pay is easy and convenient, I still prefer using domestic mobile payment services, which are more widely accepted by Chinese business owners."
There are also some Chinese users who support Apple Pay.
"It is easier to pay via Apple Pay as you only need to double touch the home button and do not have to unlock your iPhone," Zhao Zhenyu, a college student in North China's Tianjin Municipality, told the Global Times on Sunday. "Discounts are offered frequently via the payment service, and they are also attractive," he said.
Apple Pay uses the near-field communication (NFC) method of contactless communication, rather than the barcode-like method of electronic payments of using quick response (QR) codes employed by Alipay and WeChat payment, according to analysts.
"The popularization of NFC is more difficult and takes more time than using QR codes, but NFC technology has advantages in security and a variety of situations, which means there is large potential for its development in the future," Li noted.
Although Apple Pay has not gained wide acceptance in China after one year, the service represents progress for mobile payment technology across the world, and it still needs some time, perhaps five years, for its boom, he said.
