Apple Pay finally becomes available in China tomorrow, its bank partners said on social media, a year and a half after it debuted in the U.S.
Unlike in America, Chinese shoppers have been whipping out their smartphones to pay for things for years. Alibaba’s (BABA) sister company’s Alipay led the way, signing up retailers and consumers starting in 2004. Some young people in the big cities of Beijing, Shanghai and Guangzhou avoid carrying cash altogether in favor of it, similar to millennials who only use plastic in the U.S.
Over the past two years, aware of the rich potential of online payments, forecast to top $3.5 trillion in transactions by 2018, China’s other tech giant Tencent Holding Ltd (TCEHY) began pouring resources and investments into its own payment system. Already analysts say Tencent payments are worth upwards of $20 billion; reports last year said Alibaba’s finance company, which owns Alipay and could IPO next year, might be worth close to $40 billion.
Alipay remains the dominate player in China, with 50% market share in mobile payments, while Tencent holds 20%. The latest data, from iResearch:
It’s this crucible that Apple Pay is entering.
In the U.S., increased competition is actually expected to boost Apple Pay as it forces reluctant retailers to accept mobile payments, so Apple Pay’s chances of success may be even stronger in China, where payments at retailers and fast food joints are ubiquitous, and the iPhone’s third place ranking in smartphone market share means many consumers might at least try it as an alternative to their existing Alipay or Tencent pay.
Either way, the mundane ambition of grinding out share in a crowded market is a long way from Apple’s historic stock-in-trade of revolutionizing people’s lives.