Samsung Pay, Apple Pay to vie in China

Samsung Pay, Apple Pay to vie in China

Rival mobile-payments services Samsung Pay and Apple Pay will compete head to head in the all-important Chinese market next year.

Samsung Electronics and Apple on Thursday announced separate deals with state-owned bank card network China UnionPay Bank that will allow customers to add credit or debit cards to their respective mobile-payments services.

The services would start in China as early as the first quarter of next year after the tests and certifications required by the Chinese regulators.

Apple Pay, launched last year, enables owners of the iPhone 6S or Apple Watch to pay for items via the wireless near-field communication technology. Samsung Pay, which hit the U.S. in September after its Korean launch in August, can work with any magnetic-strip card reader as well as supporting NFC.

“There are more NFC readers in China compared to Korea and the U.S. Still, magnetic-strip readers are more widely used there,” said a Samsung official. “Samsung Pay has an edge over Apple Pay or other NFC-based services.”

It is crucial for Samsung to secure a sizeable share in the soaring Chinese mobile-payments market because the company, like its rivals, believes that the service would help it build customer loyalty for its future device sales.

This year, Samsung, the world’s largest smartphone-maker, struggled in China with a tiny 7.7 percent market share, according to industry data. It remained the No. 4 player after Huawei (13.6 percent), Apple (11 percent) and Xiaomi (10 percent).

“Hyundai Motor could gain a footing in China by launching capital programs through its finance unit. Samsung also needs to ramp up efforts to expand ties with local financial organizations,” an industry watcher said on condition of anonymity.

A Samsung executive also hinted that the company would pour considerable resources into Samsung Pay next year, especially in China.

About 60 percent of Chinese mobile users are estimated to use payments services, according to iResearch Group, a China-based consultancy. For now, Chinese players such as Alibaba’s Alipay (45 percent) and Tencent’s Tenpay (19 percent) dominate the market.

“The pay service is directly linked to our customer loyalty and device sales,” said the executive. “We are considering extending the service to other low-end phones.”

Samsung Pay is available only on the latest Galaxy S6 and Galaxy Note 5 phones. The company is said to be considering adopting the service into its budget smartphones, priced at about 300,000 won to 500,000 won ($250-420).

Samsung plans to increase Samsung Pay users to 17 million people by 2020. In July, the company signed a deal with MasterCard to launch the service in Europe.

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