Apple launches mobile payments service Apple Pay in China

An employee uses an Apple iPhone to demonstrate how to pay using the Apple Pay service in Beijing, China, on Feb 17, 2016.
An employee uses an Apple iPhone to demonstrate how to pay using the Apple Pay service in Beijing, China, on Feb 17, 2016.PHOTO: REUTERS

SHANGHAI (AFP) - Apple on Thursday (Feb 18) launched its mobile payments service Apple Pay in China, the company said, pitting the United States technology giant against strong domestic players in an already crowded field.

The world's second-largest economy is a crucial market for the California-based firm, and Apple Pay is available in only a handful of other countries including the United States, Britain, Canada and Australia.

"Apple Pay launching in China today. Can't wait for you to try it and see how incredibly easy it is to use!" Apple chief executive officer Tim Cook said in a posting on his verified China microblog.

But unlike most other countries, mobile payment systems are already well-established in China and Apple does not have a first-mover advantage.

Mobile transactions were valued at 9.31 trillion yuan (S$2 trillion) last year, one industry estimate showed, and according to the state-backed China Internet Network Information Center (CNNIC), the country had 359 million online payment users in mid-2015, up almost 18 per cent in six months.

The most dominant mobile and online payment providers are e-commerce giant Alibaba with a nearly three-quarters market share followed by Tencent - operator of the popular messaging app WeChat - at 17.4 per cent, according to Beijing-based BigData Research.

The Apple brand commands a strong following in China, especially among the nouveau riche and emerging middle class, with tales circulating of people selling their kidneys to buy iPhones.

Mr Ray Zhao, an internet industry analyst at Guotai Junan Securities, told AFP: "There is still a chance for Apple Pay to grab some market share. Some loyal Apple users may prefer using it instead of other payment tools.

"But the space for Apple Pay is still small," he added.

One new Apple Pay user said he looked forward to putting the service to the test - to buy his midday meal.

"The process of adding a (bank) card is a bit slow, maybe because it was just launched," said university student Li Xiang.

"I'm planning to eat at McDonald's for lunch and try it out."