Apple Pay launched in China amid stiff competition

Following a long stretch of rumours in recent months, Apple has finally launched its mobile payment solution – Apple Pay – in China, the company announced on Wednesday. In a brief note on the company's news site for developers, the Cupertino tech titan said customers can take advantage of Apple Pay using supported credit and debit cards to purchase goods and services in China, which is now the fifth market to support the digital payment system.

Apple is kicking off its mobile payment services in the country with support for UnionPay credit and debit cards, which has a wide network of 260 million users. The iPhone-maker has also tied up with China's biggest lender, Industrial and Commercial Bank of China Ltd (ICBC), among other banks, to support Apple Pay in the country that covers 80 percent of China's debit and credit cards for Apple Pay.

"You can now support Apple Pay for your customers in China, providing an easy, secure, and private way for them to pay using their China UnionPay credit and debit cards," Apple said in a statement. "Apple Pay lets users buy physical goods and services within your app without having to enter payment or contact information."

Apple Pay's entry in China isn't going to be an easy fight to succeed as it faces stiff competition from ingrained, dominant services, including Tencent Holdings Ltd's WeChat Payment and Alibaba Group Holding Ltd's AliPay. These two services have deeper reach into the domestic mobile payment services than any other service for ride hailing or online shopping.

But Apple is confident to crack the dominance and secure a sizeable share in China.

"We think China could be our largest Apple Pay market," Jennifer Bailey, vice president of Apple Pay, told Reuters in an interview.

Alipay has more than 400 million active users in China, 80 percent of which are on mobile. The service is available on both Android and iOS platforms, making it a viable choice for users of any make and model of a phone. There is a lot of skepticism on Apple Pay's success in China.

"With 100 percent saturation of local payment systems, no one in China is clamouring for Apple Pay," Reuters quoted a retailer, who requested anonymity, as saying. "Today, everyone has a local payment option on their phone, so Apple Pay is a solution in need of a problem."

At the same time, Apple will disrupt the monopoly and offer an alternate to Alibaba and Tencent services in China, Zhao Longkai, associate professor of finance at the Peking University Guanghua School of Management, told Reuters.

Apple Pay is currently available in the US, the UK, Canada, and Australia, and rumours have it that the service will soon hit France this year.