Apple teams up with UnionPay

Eddy Cue, Apple's senior vice president of Internet Software and Service, introduces Apple Pay during an Apple event at the Flint Center in Cupertino, California, Sept 9, 2014.[Photo/Agencies]

Apple Inc is trying to get more paying customers from China for its various applications, rather than just for hardware products like iPhones and iPads.

The United States-based consumer electronics maker on Monday said it has started accepting online payments made through UnionPay, a Chinese bankcard provider.

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The company's recent moves in China after the iPhone 6/6 Plus roll-out a few months back have raised speculation that Apple may team up with UnionPay to bring its mobile payment service Apple Pay to China.

"Chinese customers have been waiting to buy apps using UnionPay cards," Eddy Cue, senior vice-president of Apple's Internet software and services unit, said in a statement.

The Chinese mainland is the world's second-largest app market in terms of downloads for Apple. But the majority of the Apple users in China prefer to download free apps, although paid apps usually provide better user experiences and more premium services.

Before adding UnionPay, Apple's Chinese mainland App Store supported only debit card payments and credit card payments using Visa, MasterCard or American Express services.

The Shanghai-based UnionPay has about 400 domestic and overseas members. Industry insiders believe Apple is aiming for a bigger goal in the UnionPay partnership instead of lifting app revenues in China, which the company had tried but failed a couple of times over the past five years.

UnionPay could be a shortcut for Apple to launch Apple Pay, its young wireless payment service, in the country. A recent Wall Street Journal report said Apple is trying to join with Hangzhou-based e-commerce giant Alibaba Group Holding Ltd to tap into the Chinese payment market.

UnionPay did not say if it will help Apple bring other financial service products to China.

Li Ye, an analyst at Beijing-based research firm Analysys International, said it will take Apple a "very long time" to make Apple Pay popular in China.

"Credit card is not the mainstream payment method for Chinese consumers. Moreover, most of the retail stores are not capable of installing the right tools to support Apple Pay," Li said.

The service, using a short-range wireless payment technology known as near-field communication, was introduced during the iPhone 6/6 Plus release in September.

"Home-grown payment services dominate the Chinese payment market and there is very little scope for an overseas payment platform to expand its services," said Li.

Apple Pay is also facing strong challenges in the US, the only market where the service is currently available.

Last month, the service was blocked by US pharmacy chains CVS and Rite Aid as a US retailers' consortium - the Merchant Customer Exchange - is trying to launch CurrentC, a rival digital wallet service by 2015.