Apple Inc. introduced its mobile payments system to China through a partnership with China UnionPay Co. as the iPhone maker teams with the country’s largest clearing network to spur usage.
Customers of 19 lenders, including Industrial & Commercial Bank of China Ltd. and Agricultural Bank of China Ltd., will be able to use Apple Pay through UnionPay’s point-of-sales network across the country, UnionPay said Thursday in a statement.
Users can sign up by adding their bank card information into the Wallet application on Apple devices, the Shanghai-based company said.
Joining up with Apple Pay is another move by UnionPay to win back market share in mobile payment from Internet rivals such as Alibaba Group Holding Ltd.’s Alipay affiliate after sealing a similar deal with Samsung Electronics Co. in December.
Alipay and Tencent Holdings Ltd.’s Tenpay together controlled 68 percent of China’s online payment market in the third-quarter of last year, according to market-research firm iResearch. UnionPay had 11 percent of the market.
“For Apple Pay, given that it’s unable to get a payment license on its own under Chinese policies, the best way to penetrate China’s payment market is through cooperation with UnionPay,” Luo Yi, a Shenzhen-based analyst at Huatai Securities Co., wrote in a note Thursday. “For UnionPay, its dominance in off-line payment market is gradually losing its appeal, therefore tieup with Apple Pay can help it upgrade its technology and fight back.”
China is an increasingly critical component of Apple’s business, helping it sell a record 13 million iPhones during the September debut-weekend of its latest handsets. In the September quarter, Cupertino, California-based Apple doubled its revenue to $12.5 billion in Greater China, a region that includes Hong Kong and Taiwan.
Tapping on UnionPay’s Quickpass, a form of so-called near-field communication technology, Apple Pay users will be able to make purchases with pre-stored bank card information on their device.
Other lenders to participate with Apple and UnionPay include China Construction Bank Corp. and Bank of China Ltd.
(Beijing) – China's central bank has approved a preliminary plan to create a clearinghouse for online transactions, making progress towards dismantling separate agreements between third-party payment firms and banks.
The plan aims to launch the clearinghouse by the end of the year, and will require banks to follow its protocols and rules when clearing transactions made through third-party payment services such as Alipay, several people with knowledge of the matter said.
Currently, most third-party payment firms have relied on their own agreements with banks to settle payments, sidestepping the network of state-backed China UnionPay, the sole bank card association with a license to provide clearing services for interbank yuan payments.
Almost all offline payments such as those made at point-of-sales machines in a mall are still handled by the system provided by UnionPay, which charges banks and other firms a fee for using its network.
But the majority of payments made online are now processed according to the terms in a third-party payment firm's own agreement with banks. These agreements often differ from each other, making it hard for banks to maintain consistent standards and control risks. Also, before transactions are cleared, the funds that will be transferred to the receiver sit in the bank account of the payment service provider, raising concerns that they could be used for unintended purposes.
The plan approved by the central bank shows that the clearinghouse will be made up by only third-party payment companies and will not include any investment from banks or UnionPay, a source close to the central bank said.
A draft of the plan released in April showed that the clearinghouse may have an initial capital investment of 50 million yuan from up to 50 investors. The Payment & Clearing Association of China, an industry group whose members include banks and payment service providers, led efforts to develop the plan and would also be an investor, according to the draft. The association will flesh out the plan approved by the central bank with details on where the clearinghouse will be based and how it will be managed.
A major concern shared by many third-party payment firms is whether the clearinghouse will be able to provide equal and secure services to all of them, an executive of a payment service provider said.
"If it ends up being dominated by one or two payment firms with a monopoly status, everyone will 'vote with their feet' because it puts their data at risk," he said.
By market share, Alipay owned by Alibaba's affiliate Ant Financial Services Group has always been the frontrunner in China. It handled half of all payments made online last year, followed by Tenpay and UMS, the payment subsidiary of Internet giant Tencent Holdings Ltd. and UnionPay, which held 20 percent and 11 percent of the market, according to iResearch, a leading Internet business data provider. The rest were made up by more than 200 firms that held a license to provide online payment services.
The number of Chinese consumers making in-store mobile payments more than doubled last year and almost half of all smartphone users in the country will be making proximity mobile payments by 2020, according to research released by eMarketer.
There will be 195.3m people using the technology in 2016, representing a 45.8% growth over last year, the company’s estimates of mobile payment usage in China also reveal. In comparison, the US will be home to 37.5m proximity mobile payment users this year.
“Proximity mobile payments are payments made at the point of sale by tapping, swiping or checking in with a mobile phone,” the company says. “China’s rapid adoption of proximity payments is in part thanks to its late-mover advantage — unlike the US and other regions, China does not have a strong entrenched credit card culture.”
Straight to mobile
“In effect, China has jumped directly from cash to mobile payments,” the company adds. “In addition, urban areas in China have seen widespread adoption of Alipay and Tenpay. Also helping to drive the growth of proximity payments is the rising number of digital buyers in China making purchases on smartphones.
“Smartphone buyers in China — people who make at least one purchase through a web browser or app during a calendar year — will account for more than 72% of smartphone users in 2016.”
“Despite having a higher penetration rate than the US, China’s proximity mobile payments market still remains largely untapped, with usage mostly in concentrated larger cities,” says Shelleen Shum, eMarketer forecasting analyst. “The challenge is to get retailers to upgrade their systems to accept mobile payment methods at the POS.
“The phenomenal opportunity for retailers is that smartphone users in China are more willing to store payment information in their phones and are more willing to experiment with other forms of noncash payments than users in most other countries.
China's central bank said Friday it will halt the licensing of new non-bank payment agencies as authorities tried to better regulate the fast-expanding industry.
"No new institutions will be approved for a certain period, in principle," the People's Bank of China (PBOC) said while announcing an extension of business licenses for 27 third-party payment agencies that were already qualified.
Those agencies, including industry leader Alipay, were first authorized in 2011 and will have their services extended for another five years.
Some of them, however, will have to narrow their scope of service due to serious violations of rules or sluggish business, the PBOC said in a statement.
It vowed to guide the orderly development of the industry and prevent systemic or regional financial risks.
China's non-bank payment sector has prospered since the early days of Alipay, a service backed by e-commerce giant Alibaba, which has gone on to eat into the user base of traditional bank services.
There are around 270 third-party agencies owning payment licenses in China, with online transactions surging 46.9 percent year on year to 11.8 trillion yuan (1.8 trillion U.S. dollars) last year, according to statistics from consulting firm iResearch.
With the exception of Alipay and Tencent's Tenpay, however, many third-party agencies have struggled to find good profit models, with some starting to explore services such as peer-to-peer lending and crowdfunding platforms.
A string of fraud cases in recent years underscored hefty risks in the sector, prompting regulators to unveil a policy last year that was partly aimed at avoiding large sums of money being deposited in third-party payment accounts.
The PBOC said Friday that it will rigorously punish illegal practices by third-party payment agencies and revoke the licenses of those that do not offer payment services for a long time.
The Hong Kong Monetary Authority (HKMA) issued third-party payment licences to five companies, including the territory’s largest operator HKT and Chinese giants Alibaba and Tencent.
HKMA granted stored value facilities (SVF) licences to HKT subsidiary HKT Payment, which operates its Tap & Go mobile payment service, alongside Alibaba’s Alipay unit and Tencent’s Tenpay. The other two winners are Octopus, a local smart card system primarily used on public transport, and TNG, a local wallet app.
The SVF licences allow the firms to operate stored value facilities and retail payment systems in Hong Kong in accordance with the Payment Systems and Stored Value Facilities Ordinance.
HKMA chief executive Norman Chan said the granting of the first batch of licences for SVF issuers turns a new page in the retail payment development in Hong Kong. “Implementation of the SVF licensing regime will facilitate the introduction and adoption of new retail payment means while safeguarding the interests of users. This in turn will strengthen public confidence in using such products and services and help foster innovation and development in the local retail payment industry.”
HKT group managing director Alex Arena said: “We look forward to consumers’ growing confidence in and use of mobile payment now that service providers are subject to a proper regulatory and licensing regime administered by the HKMA.”
Last week Apple Pay was launched in Hong Kong to cardholders of American Express, Visa and MasterCard. The city is the fourth major market in Asia, after China, Australia and Singapore, where the contactless m-payment service is available. Apple introduced the service almost two years ago.
Consumers worldwide will use their mobile phones to spend a total of US$620bn on all forms of mobile transaction this year, representing a 37.8% year-on-year growth from $450bn in 2015, research from Taiwan-based analyst firm TrendForce reveals. By 2017, total mobile payment volumes will reach $780bn, climbing to $930bn in 2018 and $1.08tn in 2019.
TrendForce defined mobile payments for the study as “transfer of funds initiated using a mobile phone,” the company told NFC World. “We mean all mobile payments.”
“Apple Pay and Samsung Pay especially have been scrambling to China, which makes up a huge slice of the mobile payment market,” the firm says. “Hence, Chinese iPhone and Samsung phone users will be able to make mobile payments this year, provided that their models are of the latest generation with upgraded software.”
“Service charges from banks, telecom operators and third-party payment platforms constitute an enormous business opportunity in the mobile payment market,” says Kelly Hsieh, TrendForce’s senior manager for mobile communication and end device research.
“However, hardware and software developers also have significant roles in the industry. For instance, the take off of the mobile payment has led to the rapid market growth of fingerprint sensor chips. Since Alibaba’s Alipay and Tencent’s WeChat Payment incorporated fingerprint recognition into their payment verification processes, the number of smartphones that come with a fingerprint scanner has risen.
“In fact, this biometric technology is now a standard feature in most mainstream smartphone models. We can expect over 40% of the smartphones worldwide will be able to read fingerprints by the end of this year.”
People’s Bank of China (PBOC) is working to create a system for regulating QR code mobile payments in the country, after it suspended QR code-based services run by third-party payment providers in March 2014. “Payment providers including Alipay and Tenpay, along with a number of commercial banks, have continued marketing their QR code payment services,” Caixin reports. “A source close to the central bank said that the 2014 ban was put in place because there were no rules or standards for third party QR code payment services.” PBOC also moved to open up Chinese mobile payment services in August 2015.
SHANGHAI, Sept. 8, 2016 /CNW/ -- On September 8, UnionPay International and China Tourism Academy released the Annual Report on China's Outbound Tourism (2016), stating that China's outbound tourism has entered into a period of rational increase and will continue growing steadily in the next five to ten years. The Report notes that UnionPay cards are providing payment support for Chinese people's travel abroad.
The increase of outbound tourists slowing down while Thailand and Japan became popular.
Chinese outbound tourists reached 117 million in 2015, growing by 9.8%, which is much lower than the 20% year-on-year growth in previous years. The Report, however, is positive about China's outbound tourism, expecting the tourists to reach 133 million in 2016 with an 11.5% increase.
Better visa policies and easier payment are two major factors that promoted outbound tourism. UnionPay cards are accepted at 35 million merchants and over 2 million ATMs in 160 countries and regions.
Most tourists chose short-distance destinations last year, and over 70% of tourists travelled to Hong Kong, Macau and Taiwan. As for destinations outside China, the top 10 are Thailand, South Korea, Japan, Vietnam, the US, Singapore, Russia, Australia, Indonesia and Malaysia. Thailand and Japan saw an 88% increase in Chinese tourists. In the future, East Europe, South America and Central Asia are expected to gain popularity.
Almost all ATMs and about 90% merchants in Thailand, over half of ATMs and about 500,000 merchants in Japan, almost all ATMs and over 80% merchants in the US, and all ATMs and over 80% merchants in Singapore accept UnionPay cards.
From "going on shopping sprees" to "enjoying the local life"
Chinese outbound tourists spent 1.045 trillion US dollars in 2015, growing by 16.6%. The spending per capita was 893 USD, showing a slower increase. Chinese tourists' aim of traveling abroad is changing from sightseeing, to shopping, and now to enjoying the local life.
Shopping, tour groups, catering and attraction tickets are their major spending items. 85.9% of the tourists chose shopping as their major spending item.
Hotels, restaurants, supermarkets, and more cultural and entertainment establishments in major destinations accept UnionPay cards. Taxis in Australia, South Korea and Singapore also support UnionPay.
65% of independent travelers booked airline tickets, 56.5% booked hotels, and 57.7% arranged their trips online. Over 10 million online merchants outside mainland China accept UnionPay cards, and UnionPay cross-border online transaction volume almost tripled in 2015.
While the company’s success up to now has relied on the huge domestic home market in China – which accounts for 99 per cent of all UP credit cards issued – this could be about to change. UnionPay is setting its sights on global expansion and intriguingly Thailand is the catalyst which will help make this happen. Over the past few years several landmark decisions about ATM/debit cards have been made by the Bank of Thailand (BOT) and the Thai Bankers’ Association (TBA), and these are beginning to be implemented this year.
To combat the growing incidence of ATM and debit-card fraud, the BOT decided that all new ATM/debit cards in Thailand must carry secure embedded chips, a mandate which comes into force this May. Significantly, the BOT and TBA adopted UnionPay’s chip technology as the standard for all of Thailand’s debit cards, the first country outside of China to do so.
This will mean a mass transformation of Thailand’s 50-million strong debit-card market, as currently few debit cards have embedded chips and they are mainly used as ATM cards and not for retail transactions. Most cards will, therefore, need to be replaced and to support this UnionPay has joined with Bangkok Bank to establish the Thai Payment Network (TPN). Other leading Thai banks are also expected to become shareholders in this joint venture company.
Thai banks and other financial service providers will produce the new cards under the TPN and TPN-UnionPay brands, which will be locally issued and processed in line with BOT policy.
China UnionPay chairman Ge Huayong said that the launch of TPN in Thailand has great significance and he cited four major reasons for this. It is a new breakthrough in the development of technical standards in China’s financial sector, it represents a model for China’s policy of Going Global, it lays a solid foundation for large-scale acceptance and issuance of UnionPay cards in other local markets, and it will help UnionPay develop a business-expansion model which can be replicated which will accelerate the roll-out of its global business.
Ge Huayong also added that it ties in with China’s “One Belt, One Road” international expansion strategy as UP plans to develop similar payment infrastructure in other countries along the Belt and Road.
Meanwhile, in another major development China UnionPay last month signed a memorandum of understanding with Visa to collaborate on payments security, innovation and financial inclusion.
Visa CEO Charlie Scharf said the two card giants would work together to develop innovations in digital payments and broaden the access of financial services to a wider population.
All these developments fit well with the Thai government’s digital payments strategy and should ensure that Thailand is at the forefront of using new technology in the payments industry.
The benefits include helping our businesses keep up-to-date with modern technology while ensuring the public has easy and convenient access to financial services.
PAYMENT METHODSVisa, China UnionPay Sign MoU On Payments Innovation
ByPYMNTSPosted on February 25, 2016 Visa China Union Pay MoA SHARE TWEET SHARE SHARE EMAIL
Visa has struck a new deal with China UnionPay through a memorandum of understanding to collaborate on three key areas in the financial ecosystem: payments security, innovation and financial inclusion.
The deal, which was signed by Shi Wenchao, President of China UnionPay, and Visa CEO Charlie Scharf, aims to provide a platform for the two payments networks to come together to “strengthen and create new value for the bank card ecosystem benefiting consumers, merchants, financial institutions and technology partners,” according to a release on the agreement.
The companies will specifically tailor that collaboration to the three areas mentioned above.
“Visa is delighted to have concluded this MOU with CUP. This is a unique collaboration between two leading industry players to address major challenges facing the payments industry,” Scharf said. “We are excited to be working together on innovation as digital payments transform commerce, resulting in safer, faster and more convenient ways for consumers to pay. Innovation will also play an important role in our joint efforts to expand access to financial services for the underserved. The global payments industry will benefit from these efforts.”
China UnionPay operates China’s national inter-bank clearing and settlement system, develops the worldwide UnionPay Card acceptance network, and promotes the issuance and usage of the UnionPay Card. The total number of UnionPay Cards issued both at home and abroad stands at over 5 billion.
Wenchao commented: “The MOU signing is the result of joint efforts by CUP and Visa, representing a new start to our win-win cooperation. As open payment networks, both companies follow the same business model, share the common interest of maintaining their brand rights and promote the core concept of open cooperation. The joint cooperation will have an important influence on the healthy development of the global payments industry, providing cardholders with more convenient, secure and highly efficient payment services.”
“CUP stays committed to the philosophy of openness and win-win cooperation,” he continued. “CUP is keen to actively cooperate with relevant parties to innovate and promote the orderly long-term development of the global payments industry, fully respecting the regulatory regime and industry consensus to underpin those efforts.”