Technology giant Apple has announced that shoppers in Chinawill now be able to use China UnionPay as a payment option for purchasesthrough Apple’s App Store. As thedomestic bankcard network, China UnionPay operates China’s national inter-bankclearing and settlement system and has by far the greatest acceptance networkin the country and today has approximately 4.5 billion payment cards capable ofusing the network’s rails.
With the new agreement, Chinese customers will be able toeasily link their Apple ID with a UnionPay debit or credit card for one-tappurchases. Commenting on the announcement, Eddy Cue, Apple’s senior vicepresident of Internet Software and Services said, “The ability to buy apps andmake purchases using UnionPay cards has been one of the most requested featuresfrom our customers in China. China is already our second largest market for appdownloads, and now we’re providing users with an incredibly convenient way topurchase their favorite apps with just one-tap.”
While the deal is a significant boost for Apple in China,the recent news by China’s State Council which on October 29th announcedvia Reuters that it intends to end China UnionPay’s domestic monopoly onprocessing debit and credit card payments made in yuan makes the announcementslightly less important given Apple’s historical relationships with the otherglobal card networks. However the State Council’s announcement failed toprovide any details on the timeline for ending the domestic monopoly onclearing or any indication of whether other mechanisms to protect domesticplayers will be raised meaning it could be years before anything changes.
Regardless of these potential regulatory changes, the dealstill makes a lot of sense for both parties and with China UnionPay attemptingto become as international as Visa or MasterCard, this relationship couldeventually expand geographically beyond China.
Overview by Tristan Hugo-Webb, Associate Director, International Advisory Service for Mercator Advisory Group
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