Apple announces Apple Pay partnership with China UnionPay, expects 'early 2016 … | Business News

Apple announces Apple Pay partnership with China UnionPay, expects ‘early 2016 …

23 Dec 2015 | Author: | No comments yet »

Apple Bringing Apple Pay to China With UnionPay.

Apple Inc. said it plans to bring its mobile-payments service to China, securing agreements with the country’s state-run UnionPay and 15 Chinese banks. On the heels of reports that Apple Pay is gearing up for a February launch of its mobile payment service in China, the country’s biggest credit card company has entered into a JV with a startup out of the UK to take its own steps into smartphone-based transactions. Powa Technologies has formed a joint venture with UnionPay Network Payments, a division of China UnionPay, to launch PowaTag UnionPay, an app that will let people pay for items via their mobiles in stores.

In the U.S., Apple gets 0.15% of all credit-card transactions through Apple Pay and 0.5 cents per debit transaction, according to people familiar with the matter. China UnionPay’s QuickPass and Apple Pay together will protect customer payment information through industry-leading payment tokenization technology. China is seen as a key battleground for payments, as it is projected to be the biggest bank card market by 2020 and is only just being opened to new entrants. Security is at the core of Apple Pay, so when you add a credit or debit card, the actual card numbers are not stored on the device, nor on Apple servers.

The startup, which raised a massive $80 million last year, valuing it around $2.7 billion, is trying to tap into the trend of so-called “online to offline (O2O)” – where shoppers search for products online then buy them in a physical store. While companies like Apple, as well as local companies Tencent and Alibaba (which dominate online payments) are looking to make headway in point-of-sale transactions, Powa and UnionPay are taking a different approach.

The partnership between Apple and UnionPay also comes just days after UnionPay partnered with a British payments company, Powa, to develop a payments app for China. While UnionPay’s subsidiary is managing the payment processing, the technology underpinning the mechanics of the O2O transactions is called PowaTag. With the innovative NFC antenna design, simply hold iPhone near China UnionPay’s QuickPass-enabled POS terminals with your finger on Touch ID® to pay.

Powa claims that it is working on PowaTag omnichannel commerce projects with some 1,200 brands worldwide including L’Oreal and French supermarket giant Carrefour. UnionPay has some 1.3 billion credit and debit card users, and while MasterCard and Visa are more household names in the Western world, UnionPay — with its focus on the huge Chinese market — is actually considered the world’s biggest merchant acquirer, with some 6 million merchants under its wing. When asked if the company was thinking of going public soon, Wagner said it was “definitely on our radar”, adding that it could be possible in 2016 but he was giving “no commitments”.

The other significant aspect of this deal is that it’s a signal of how the card processing giant is working with third parties to create more services to enable digital payments in the country to meet demands in a market that is still rapidly expanding at a time when more mature markets like the U.S. are slowing down in their growth. Apple added UnionPay to its App Store payment options in China last year, In one of the more notable examples of how Apple was sharpening its business focus in China; and how China’s financial giants were also gradually working more with non-Chinese tech companies to grow its business. Earlier this week, the company announced that it was expanding its QuickPass contactless technology to mobile devices: the NFC-based service previously worked by way of phyiscal cards, and now UnionPay will offer smartphone users an option to upload those cards virtually into a mobile wallet (not unlike the model behind Apple Pay).

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