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Analysts Doubt Apple Pay Will Break into China Mobile Payment Market

| Feb 22, 2016 12:07 AM EST

Analysts said that the Apple Pay service is likely going to have a hard time breaking into the Chinese mobile payment market due to stiff competition.

After Apple launched its Apple Pay service in China, analysts expressed doubt on whether the mobile payment scheme will get a foothold in the Chinese market.

According to analysts, Apple Pay's near-field-communication-based payment mode is likely to struggle in getting a fair share of the market due to competition. NFC uses a special chipset installed in the iPhone to transfer transaction data between the device and point-of-sale (POS) terminals without physical contact.

iResearch Consulting Group analyst Li Chao said that Apple's main domestic competitors Xiaomi Corp. and Huawei Technologies Co. Ltd. have already released their own NFC-enabled models, which are priced much lower than the most affordable iPhone model, which sells for around 4,488 yuan ($690), China Daily reported.

Apple currently holds less than 15 percent share of the Chinese market, while Xiaomi and Huawei, along with three other top manufacturers, have a combined control of about half.

Observers said that Apple Pay will also have a hard time trying to get a better share of the Chinese mobile payments market, as it is already dominated by local Internet giants Alibaba Group and Tencent Holdings through their respective Alipay and Tenpay payment services.

China Europe International Business School marketing professor Chiang Jeong-wen said that the two companies have already entrenched themselves well in the market by getting their own POS devices installed in retail stores across the country.

Chiang remarked that it would be next to impossible for a foreign company to really penetrate into the market with the two services' coverage, the Global Times reported.

The Apple Pay service also drew flak from Chinese users during its official launch on Thursday, with some iPhone users complaining that they are having a hard time synching their debit cards with their devices while others reported glitches in the Wallet app. Customers also expressed dismay that the service is compatible only with the latest iPhone 6 models.

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