Apple strikes China mobile payment deal

Smartphone giant Apple has announced the addition of UnionPay, the dominant Chinese debit and credit card payment organisation, as a payment option for Chinese App Store users, in what is likely to be a strategically significant move for Apple’s fortunes in the world’s largest smartphone market.

UnionPay is the state-approved card payment clearing house, referring to itself as “an inter-bank transaction settlement system”. So, in effect, for yuan electronic payments it’s the only game in town, and a vital partner if you want to be an ecommerce player in China.

“The ability to buy apps and make purchases using UnionPay cards has been one of the most requested features from our customers in China,” said Eddy Cue, Apple’s SVP of Internet Software and Services. “China is already our second largest market for app downloads, and now we’re providing users with an incredibly convenient way to purchase their favourite apps with just one-tap.”

Apple has done well to establish such a large app market in China without UnionPay, so you have to assume that position will improve further as a result of this deal. One of Apple’s main competitors in China is Xiaomi, which is offering smartphones with an Apple-like premium look, but at a fraction of the price in order to create a market for its mobile software and services. If Apple wants to compete with Xiaomi it needs to localise fast.

UnionPay has issued over 4.5 billion payment cards both at home and internationally since it was formed in 2002. Through other partnerships it’s also accepted in over 140 countries and regions globally. This deal will enable Apple users to link their Apple ID with UnionPay for one-tap purchases and may well be a key stepping stone to eventually bring Apple Pay to China.

In not entirely unrelated news is has been reported that mobile cab service Uber has partnered with payment service Paytm in order to overcome complaints about its model in India. While customers now have one extra step in their Uber payment process, it should allow the company to continue to do business in the world’s second most populous country.