Apple is set to launch Apple Pay, its own brand of payment service, but industry experts doubt that the U.S. tech veteran could gain a sizable share in China’s lucrative mobile payment market.
China has witnessed a whopping growth in the mobile payment sector, reaching 5.99 trillion yuan in 2014, as reported by the Beijing-based IT consultancy iResearch.
Currently, China’s Internet giants Alibaba Group Holding and Tencent Holdings dominate the market. iResearch also remarked that the combined share of the two firms has reached 93.4 percent.
According to experts, this is not the only hindrance that Apple Pay will face. Apple’s mobile payment service must also face the limited consumer use of their newly launched technology.
Apple Pay utilizes Near Field Communication (NFC) technology, enabling users to tap their smartphones on point of sale machines to pay for their purchases.
However, the NFC payment technology only accounts for a small 1.6 percent in China’s total mobile payment market, according to a 2013 data. Analysts predict that this is yet another limit to Apple Pay’s growth in the country.
U.S.-based tech research firm Gartner revealed that NFC technology could only take up to 6 percent of the market by 2018. Meanwhile, other software-based services like Quick Response (QR) codes will occupy the rest.
Sandy Shen, Gartner’s consumer services and mobile devices research director, said that NFC payment’s share will be higher than the global average in China, but the growth will not be that much.
iResearch expects that in 2018, the Chinese mobile payment market will grow to as large as 18 trillion yuan, thrice its current value. Hence, industry experts agree that the race toward dominating the market is yet to see more intensified battles.