Samsung and Apple get OK for mobile pay in China

Apple and Samsung Electronics have reached separate agreements with China UnionPay to introduce their competing mobile payments systems in the country next year.

Customers of UnionPay, China’s largest payment and clearing network, will be able to add their bank cards to iPhones, iPads and the Apple Watch for purchases through Apple Pay, the companies said in a statement. Users of Samsung Galaxy and Note devices will have similar options.

The deals allow the two biggest smartphone makers to take their competition in the nascent payments area to the world’s largest market, where they will compete with third-party service providers including Alibaba Group Holding and Tencent Holdings.

For foreign companies such as Apple and Samsung, China offers an opportunity to profit from a market where mobile-payment transactions jumped 134 percent to 22.6 trillion yuan ($3.5 trillion) last year, central bank data showed.

Apple and Samsung use different technology for their services. Apple Pay utilizes near-field communication (NFC), which enables users to pay for purchases by tapping their phone or watch with stored bank-card information on a device at cash registers.

UnionPay has more than 5 million point-of-sale machines that are NFC-enabled in China. While Samsung’s service also uses NFC, it offers traditional magnetic stripe reading technology, as well.

Apple Pay charges 0.15 percent of the value of each purchase made through its system, out of the 2 percent fee paid by merchants in the U.S., Caixin magazine reported in February. Such a rate would be too expensive in China, given that the total fee paid by some merchants is only 0.38 percent, Caixin said.

Alibaba’s Alipay affiliate controlled 83 percent of China’s third-party mobile payment market in 2014, while Tencent’s Tenpay service held 10 percent, according to market-research firm iResearch. Alipay allows its more than 400 million real-name registered users to make purchases from desktop computers, tablets and smartphones at more than 130,000 bricks-and-mortar merchants, according to its website.

The mobile payments tool is expected to be available for China UnionPay cardholders early next year after tests and certification required by Chinese regulators, the companies said.

“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,” Eddy Cue, Apple’s senior vice president of Internet Software and Services, said. Bloomberg