Apple taps UnionPay for mobile linkup in China

A deal between Apple Inc and China UnionPay Co to allow users to link UnionPay debit or credit cards with Apple's App Store should not have a significant effect on Apple's bottom line, according to a director at a US-based market research firm.

"All mobile operators have app stores as [do] popular original equipment manufacturers (OEMs), such as Xiaomi and Lenovo," Will Stofega, program director with the International Data Corp's (IDC) mobile phones team, wrote in an email to China Daily.

"China has plenty of software developers who are well-versed in developing applications that cater to Chinese cultural interests," Stofega said. "Compared with national brands such as Xiaomi, Lenovo or Coolpad, Apple is not strong in the China."

On Monday, Apple and UnionPay announced a deal that will permit customers in China and abroad to use China's leading bank card for purchases of Apple's mobile applications. Customers can use Apple's App Store to purchase and download programs for installation on Apple devices, including iPhones and iPads.

Stofega said China has hundreds of app stores that cater specifically to Android devices, which could affect Apple's forays into the Chinese market.

"Android is the dominant operating system by a wide margin, and [Apple] cannot count on the network to create momentum," Stofega said.

Eddy Cue, Apple's senior vice-president of Internet Software and Services, said in a press release that China is already one of the company's largest markets for app downloads.

"The ability to buy apps and make purchases using UnionPay cards has been one of the most requested features from our customers in China," Cue said. "Now we're providing users with an incredibly convenient way to purchase their favorite apps with just one tap."

China UnionPay, established in 2002 in Shanghai by the State Council and the People's Bank of China, is the only national bank-card organization approved for use in clearing transactions in China.

Data from the People's Bank of China show that the country had issued 4.54 billion bank cards through June 30, comprising nearly 4.12 billion debit cards and 422 million credit cards. Bank-card transactions amounted to 109.58 trillion yuan ($17.9 trillion) in the second quarter, up 6.1 percent year over year.

In October, Apple's new iPhone 6 and iPhone 6 Plus arrived in China despite a regulatory delay in the rollout of the company's flagship smartphone device. Apple Pay, the company's mobile payment service, which also debuted last month, has yet to be made available in China.

Apple posted its largest third-quarter sales volume figure in 2014, data from IDC Corp showed. The company boosted its global smartphone shipments by 16.1 percent in the third quarter to 39.3 million units, second worldwide behind Samsung Electronics Co (78.1 million units).

The last few weeks have been busy for China UnionPay, including the rollout of the company's first prepaid debit card in Latin America. Plans for credit cards are slated for the second quarter of 2015, company officials said.

On Oct 29 China's State Council announced that it intends to end China UnionPay Co's control over domestic bank-card transactions. The statement from the central government did not include a timeframe.

jackfreifelder@chinadailyusa.com