Apple, Samsung tap mobile payment potential in China

Tech-savvy Chinese shoppers will have new options when paying for their loaded shopping bags this holiday season, as two top smartphone vendors are poised to launch mobile payment services in the country.

Apple Inc and Samsung Electronics Co Ltd signed separate deals on Friday with China UnionPay, the biggest bankcard association in China, introducing payment methods that will be simpler than rival mobile payment applications.

Apple and Samsung users will be able to make purchases at brick-and-mortar stores across China using the companies' portal devices.

Near-field communication function, a form of contactless communication between devices, is needed to conduct transactions, and the user's device must be linked to a UnionPay bankcard before use, according to China UnionPay.

The service will be available on a wide spectrum of devices, from iPhones, iPads and Apple Watches to Samsung's high-end rollouts, the companies said.

The service will not be available until 2016, subject to security tests and a certification process.

Li Chao, a Beijing-based analyst from iResearch Consulting Group, said that to lure users, the new payment service is designed to be easier to use than existing apps such as Alipay and WeChat.

Users only need to hold the device near a point-of-sale terminal to complete transactions.

Alipay, owned by Alibaba Group Holding Ltd, and WeChat, a Tencent Holdings Ltd service, require users to open the apps, activate payment function and type in a personal identification number before a transaction can be completed.

Apple and Samsung said the simplified procedure was for better user experience and will not compromise information safety.

The partnerships also marked the two overseas tech giants' latest attempt to turn the tide in a losing battle against rising local handset vendors.

Xiaomi Corp and other Chinese smartphone makers shipped roughly three-fourths of new products to the market in the second quarter, crushing Apple and Samsung's market share, consultancy IDC said.

Di Jin, an analyst with Forrester Research Inc, said that partnering with UnionPay was a "plan B" for Apple and will not help the US company gain users.

"Alipay remains the dominant player in the mobile payment sector, and Apple will find it difficult to surpass market leaders in the short run," Jin said.

Transactions completed on mobile payment apps reached 2.4 trillion yuan ($370 billion) in the third quarter, a jump of 64.3 percent year-on-year, according to iResearch.

Alipay was responsible for 70 percent of the transactions and Tenpay, which handles payments for WeChat, took nearly 20 percent.