Apple, Samsung ink deals with China’s UnionPay

23 Dec 2015 | Author: | No comments yet »

Apple, Samsung team up with UnionPay to launch payment services in China.

San Francisco: Apple Inc and Samsung Electronics Co. reached separate agreements with China UnionPay Co. to introduce their competing mobile payments systems in the country next year.On the heels of reports that Apple Pay is gearing up for a February launch of its mobile payment service in China, the country’s biggest credit card company has entered into a JV with a startup out of the UK to take its own steps into smartphone-based transactions. Customers of UnionPay, China’s largest payment and clearing network, will be able to add their bank cards to iPhones, iPads and the Apple Watch for purchases through Apple Pay, the companies said in a statement. US presidential candidates Hillary Clinton, Bernie Sanders, and Martin O’Malley will face off in a third debate in New Hampshire on YouTube this Saturday.

UnionPay Network Payments — a wholly owned subsidiary of China UnionPay, the state-run company that controls debit and credit card payments processing in China — has inked a 10-year deal with Powa Technologies, a venture-backed mobile commerce company based in London. Both Apple and Samsung’s mobile payment systems will work with China UnionPay’s QuickPass technology,which allows consumers to pay for purchases by simply waiving their near-field communications (NFC)-equipped mobile device in front of a QuickPass-enabled payment terminal. “With the rapid development of the mobile payment industry, China UnionPay is committed to open cooperation with parties in the industry to provide more secure and more convenient products and services for consumers,” said Chai Hongfeng, executive vice-president at the Shanghai-based company. While the deals allow the two biggest smartphone makers to take their nascent payments systems to the world’s largest market with the backing of state-backed UnionPay, they will face entrenched competition. Apple Pay and Samsung Pay are both slated to be launched next year after the relevant tests and certification are conducted and processed, as required by Chinese regulators. “Having two global players, Samsung and Apple, competing for market share in the China mobile payment space will benefit UnionPay. While companies like Apple, as well as local companies Tencent and Alibaba (which dominate online payments) are looking to make headway in point-of-sale transactions, Powa and UnionPay are taking a different approach.

Tenpay have already built large customer bases for payments on their e-commerce and other business platforms. “Alipay remains the industry’s dominant player, which Apple Pay would find difficult to surpass in the near future,” Di Jin, an analyst at Forrester Research, said in an email. “The partnership between Apple and UnionPay is a strategy of compromise that is unlikely to help Apple gain more users from their competition, despite UnionPay’s existing mobile payment alliances with banks and internet companies.” Still, for foreign companies such as Apple and Samsung, China offers an opportunity to profit from a market where mobile-payment transactions jumped 134 per cent to 22.6 trillion yuan ($3.5 trillion) last year, central bank data show. Gartner analyst Sandy Shen, however, said those two deals will likely see success in large mainland cities “where consumers are more receptive to new technologies and where there is a larger installed base of contactless point-of-sale terminals”. That number pales in comparison with the country’s estimated 913 million 3G and 4G smartphone users by the end of this year, according to an industry study. Shen said China UnionPay and its domestic bank partners will need to rapidly increase the number of contactless mobile point-of-sale terminals across the country.

US secretary of state John Kerry chairs a UN Security Council meeting, arranged during Kerry’s visit to Moscow this week, in an effort to broker an end to Syria’s bloody civil war. While UnionPay’s subsidiary is managing the payment processing, the technology underpinning the mechanics of the O2O transactions is called PowaTag.

Powa claims that it is working on PowaTag omnichannel commerce projects with some 1,200 brands worldwide including L’Oreal and French supermarket giant Carrefour. Alibaba’s Alipay affiliate controlled 83 per cent of China’s third-party mobile payment market in 2014, while Tenpay held 10 per cent, according to market-research firm iResearch. Alipay allows its more than 400 million real-name registered users to make purchases from desktop computers, tablets and smartphones at more than 130,000 bricks-and-mortar merchants, according to its website.

UnionPay has some 1.3 billion credit and debit card users, and while MasterCard and Visa are more household names in the Western world, UnionPay — with its focus on the huge Chinese market — is actually considered the world’s biggest merchant acquirer, with some 6 million merchants under its wing. Apple added UnionPay to its App Store payment options in China last year, In one of the more notable examples of how Apple was sharpening its business focus in China; and how China’s financial giants were also gradually working more with non-Chinese tech companies to grow its business. Earlier this week, the company announced that it was expanding its QuickPass contactless technology to mobile devices: the NFC-based service previously worked by way of phyiscal cards, and now UnionPay will offer smartphone users an option to upload those cards virtually into a mobile wallet (not unlike the model behind Apple Pay).

Separately, pharmaceutical giant GlaxoSmithKline’s HIV drug unit agreed to a $1 billion price tag for assets owned by US peer Bristol-Myers Squibb (paywall). UnionPay says that it’s working with 20 commercial banks on the service so far, with the tech based on NFC (near-field communication), HCE (host-card emulation), TSM (trusted service manager) and Token technologies. The idea of building an adjacent service with Powa could be for two reasons: an expansion of UnionPay’s wider role in payments anytime, anywhere; but also potentially to hedge bets, since it’s not clear just what will end up being the most popular way that consumers use mobile devices to buy things. “Our platform is a project which operates together with UnionPay Network Payment. The British prime minister presented four demands aimed at renegotiating the UK’s relationship with the European Union, and said he was confident that solutions would be found. European Commission president Jean-Claude Juncker described each of the issues as “tricky.” Afghanistan won approval to join the World Trade Organization.

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