Financial security is undoubtedly a crucial part of a country’s overall security. Before we panic about Apple Pay arriving in China, we first have to learn about Apple Pay.
Apple Pay is different from Alipay. Alipay works as a wallet and manages the funds within. Alipay has billions in cash flow constantly; if it ever suffered volatility, a lot of people would be affected. Apply Pay works as a payment method and is an extension of a bank card. It is similar to a replica of the bank card for the cell phone, as in a virtual bank card. While it is called a wallet, it is not a real wallet. For example, if you were at a store and needed to swipe your bank card, with Apply Pay, you only need to take out your phone to pay. Apple Pay saves us the motion of taking out our bank card and is not its own payment system.
From a commercial operation standpoint, Apple and Unionpay do want to challenge Alipay and WeChat payment with Apple Pay, but there is some difficulty in getting a share of the Chinese market.
One, Apple Pay works with Near Field Technology as its payment technology. It pays without contact; however, this poses some problems. Because it is not a wallet, it works by linking various bank cards to its app to carry out payment, which is not easy for many users. Many users would worry that linking a lot of their bank cards to Apple Pay has risks.
Two, commercial support takes time. A big issue is the limited number of iPhone users, and Apple Pay requires a lot of stores to participate and to add Near Field Technology. Now we already know WeChat payment is relatively easy, we just need to look for a QR code. These two methods each have their problems, but also advantages.
Three, while Apple is not against doing Apple Pay on its own, it cannot do it on its own. China has concerns over financial security, so it would not issue a financial payment license to Apple, which differs from WeChat payment and Alipay. WeChat payment and Alipay work primarily as a wallet, but Apple Pay is linking funds with a banking system. It is hard to say whether banking systems are better than WeChat payment and Alipay at safekeeping. Unionpay has its own virtual wallet, but its promotion is far weaker than WeChat payment and Alipay. How the future market unfolds remains to be seen. The number of Apple Pay users in China is relatively small, since only around 20 percent of Chinese cell phones have it, while 80 percent to 90 percent of users are dependent on WeChat payment and Alipay.
Four, Apple Pay has not done as well as expected in other markets either in the past year. Can it split the Chinese market with Alipay and WeChat payment? It is possible but not likely.
Regardless of its commercial outlook, we do not have to worry about Apple Pay’s effect on national security. Apple is a business. Its primary goal is to make money. I think the importance of the Chinese market to Apple and Apple’s consistent attitude toward the Chinese government means that it has a different culture than Google. Apple will not instigate any ideologies and choose to oppose the Chinese government.
The author is a guest professor at the Beijing University of Post & Telecommunication and a renowned observer of the Chinese IT industry.