Editor’s note#
: iPhones are the most gifted items by affluent Chinese, and when they buy them, they’ll now be able to use Alipay. This concession from Apple further consolidates payments power among two players in China: Alibaba and Tencent. This story was originally published by our content partners at Tech Node.
Shoppers can now use Alipay in all of mainland China’s 41 Apple retail stores, the first time a third-party payment system has been accepted by the firm in store. The Alipay app now has a new section where users can link their Apple accounts to their Alipay account and find special offers for spending in physical Apple stores.
Apple has seen mixed success in China. Its products are doing well, its mobile payment system Apple Pay less so. The country is Apple’s second largest retail market after the US and sales have grown for the last two quarters, an increase of 11% in its combined fiscal first-quarter revenue (which includes Taiwan and Hong Kong) to a record 17.9 billion. Much of this comes from demand for the iPhone.
Adding Alipay as a payment option in store is in line with making sales as convenient as possible for shoppers. WeChat Pay is on a trajectory to surpass Alipay in terms of total transaction volume, though shoppers have a tendency to use Alipay for larger purchases (Apple products, for example) and WeChat for day-to-day shopping such as groceries and convenience stores.
Despite there being an estimated 243 million iPhone users in China as of July 2017, the take-up of Apple Pay has been limited. Shoppers were already firmly in the habit of using Alipay and then WeChat Pay via QR codes, leaving little space for Apple and its NFC approach, despite (or because of) some unusual promotions.
A report by Bloomberg found that only 1% of one Chinese bank’s 10 million online banking customers had even activated the service. Even in Apple’s homeland of the US only 13% of users were thought to have tried the service by April 2017 and it is believed to have peaked in March 2016.
Ant Financial’s Alipay has been available as a payment method in Apple’s App Store since November 2016. Tencent’s WeChat Pay is also an option for making app store payments. Alipay users with Apple IDs linked to the China App Store can now bind the two accounts with a newly-created area with the Alipay app (we had to do a search to find this). According to Ant Financial, those who activate the function will be able to make payments in the App Store with Alipay and receive offers for spending in Apple Stores with Alipay.
Apple has yet to make any comment on the move though we thought our readers may find its most recent retail announcement of interest: Apple’s first ever store in South Korea opened on January 27, 2018.