Earlier this month, Apple Pay officially launched in China, making it the fifth location that Apple Pay is available and the first location in Asia. Users in China can pay with their iPhone, iPad or their Apple Watch with any UnionPay debit or credit cards at any UnionPay compatible point-of-sale systems.
Apple believes that China could be their largest Apple Pay market yet. Apple has secured deals with 19 of the biggest lenders in China, which means that 80 percent of credit and debit cards in China will be eligible for use with Apple Pay. This may seem like a gold mine for Apple, but many believe that dark times lie ahead for Apple Pay in China.
Apple Pay in the US
First, let’s take a look at how Apple Pay is doing in its home country, the US. Currently, Apple Pay usage has hit somewhat of a plateau in the US. According to a new survey from First Annapolis Consulting, 73% of all consumers said they had heard of Apple Pay, but only 20% of iPhone 6 users said they had ever used it. The number of iPhone 6 users who had used Apple Pay in 2015 is around 22%. The reasons behind these numbers are rather complex. Rather than blaming it on the user experience, many consumers cite retailer adoption as the reason they don’t use mobile payments regularly.
Why does Apple believe Apple Pay will be successful in China?
Naturally, we would assume Apple Pay would do tremendously well in China due to the fact that they have more than double the amount of NFC terminals that the US does. Meaning that retailer adoption is less of a problem than in the US. Another reason that many people believe that Apple Pay is going to do well in China is because the culture there supports new technologies. Asian culture is known to be on the forefront in early adoption of technology such as the mobile wallet. While on the outside that looks to be extremely promising for Apple, it is actually their worst enemy.
Enter WeChat and AliPay.
WeChat and AliPay are the two leading mobile wallets in China. WeChat is a messaging app with a built in mobile wallet and AliPay is a payments and local shopping app. Each app already has hundreds of millions of users- 650 million on WeChat, 400 million on Alipay. Gaining this many users is not easy and takes lots of promotion. For an example, check out WeChat’s Chinese New Year promotion that one of PassKit’s very own experienced for himself.
Not only does WeChat and AliPay have an advantage because they have a user base, but Apple Pay is missing a key ingredient that is instrumental in the success of WeChat and AliPay. That is the fact that both WeChat and AliPay have focused on becoming more than just a mobile payment platform, but rather an entire online to offline experience.
WeChat and AliPay both feature offers from different businesses as well allow business to build relationships through their app. People in China are used to having full-featured apps that are more than just a payment provider.
There is still hope for Apple Pay
The main thing to note is that Apple Wallet is actually capable of being much more than just a place to store credit cards. Users can store business cards, coupons, loyalty cards, event tickets, and any other type of content a business wants to promote via mobile wallet. Apple Wallet also features beacon integration that allows businesses to further enhance the consumer’s experience within their store. The problem is that Apple has spent so much time trying to promote mobile payments, they forget to promote the best part of Apple Wallet. The actual wallet itself.
China and the businesses in China are in a very good position to capitalize off of the capabilities of mobile wallets. And many already are with WeChat and AliPay. If business start to treat Apple Wallet like the awesome tool that it is, it can become a major driving force in the mobile payment/mobile marketing ecosystem in China. This would also make Apple Pay a success.
The advantage Apple has over nearly every competitor in Asia, is the trust and status that comes alongside an Apple logo. By using this trust and status to their advantage, Apple can gain adoption much faster than WeChat and AliPay. If businesses begin to adopt Apple Pay and start marketing through Apple Wallet, this will dramatically increase the chances of success for Apple Pay. And with plans to expand Apple Pay into Hong Kong and Singapore by the end of this year, Apple is going to need to figure this out sooner rather than later.
Overall, Apple Pay has a chance to succeed in China if they begin targeting the right demographic in the right way. Many people believe that Apple Pay won’t succeed because China doesn’t need another mobile payment provider, but that’s not true. If Apple Pay doesn’t succeed in China, it will be because Apple did a poor job promoting the capabilities of Apple Wallet. They need to show business owners Apple Wallet’s potential as a powerful marketing tool and it’s ability to bring consumers from online to offline. Once business owners see this value and adopt, they can start promoting it to consumers, who will also find value.
One thing that is for sure is that Apple Pay in China is definitely something to keep an eye on. Apple has major plans to start spreading Apple Pay around the world in 2016 and China will set the tone.
Do you think Apple Pay will succeed in China? Or will WeChat and AliPay remain as the driving forces in mobile payments?
