Apple Pay in China represents a major step in Apple’s global mobile payments expansion, bringing the digital wallet to the world’s second-largest economy. Unlike the United States, where mobile payment adoption remained relatively slow following Apple Pay’s launch, China already had a large population of consumers accustomed to paying with smartphones. That familiarity could make it easier for Apple to encourage iPhone owners to try its payment service.
China’s established mobile payments infrastructure could also provide Apple Pay with more opportunities for everyday use, particularly through a broader base of NFC-enabled payment locations. However, Apple is entering a market with powerful domestic competitors. Alipay and Tenpay already have substantial consumer adoption and established payment ecosystems, meaning Apple Pay must persuade consumers not simply to embrace mobile payments, but to change which mobile payment service they use.
The staged global rollout continued today, going live the in the 2nd largest economy.
Apple launched its mobile wallet over a year ago, but it is still not doing well in Apple’s native US. But its expansion to China, the fifth country to get Apple Pay, could be different. Chinese consumers are used to mobile payments, thanks to Alibaba’s Alipay and Tencent’s Tenpay—the overwhelmingly dominant players of the country’s $90 billion mobile payments industry.
Mercator Advisory Group anticipates consumer uptake of Apple Pay will indeed outstrip that in the U.S. due to existing familiarity with mobile payments in China and a wider range of locations enabled for NFC transactions. However, it remains to be seen how quickly, if at all, that Apple Pay is able dethrone indigenous mobile payment enabler Alibaba as the method of choice.
Apple Pay in China could experience faster initial adoption than it did in the United States because Chinese consumers are already comfortable with mobile payments. Strong contactless infrastructure and Apple’s existing device customer base provide additional advantages as the company expands its digital wallet internationally.
The larger challenge will be competing with entrenched domestic platforms such as Alipay. Apple Pay’s success will ultimately depend on whether convenience, merchant acceptance, and integration with the Apple ecosystem provide enough value to change established consumer payment habits in one of the world’s most developed mobile payments markets.
Overview by Joe Walent, Senior Analyst, Emerging Technologies Advisory Service at Mercator Advisory Group
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