Apple Adds China’s UnionPay to App Store Payments
Apple has cut another deal with a card network, enabling China’s UnionPay cards to make purchases in the App Store.
This is not just another deal for mobile payments via ApplePay with an American card network — It’s much higher stakes than that. This deal involves China’s UnionPay network, by far the largest card network in the world — 4.5 billion cards. The company, with the approval of Beijing and the People’s Bank of China, enjoys a virtual monopoly over China’s card business and takes a cut on all card-based transactions in China.
Outside payments companies, led by MasterCard, are scrambling over one another to get a piece of the action.
Apple indicated in its 4Q earnings that sales in China counted for 16% of total sales, or $29.8 billion, with room to grow.
UnionPay cardholders — everyone with a payment card in China — can now use their cards to make payments in Apple’s App Store, and this functionality will likely extend to Apple Pay as well.
With 100 million iPhone users, China is the iPhone’s leading growth market, and Tim Cook has repeatedly stated this is where he sees Apple’s greatest opportunities lying. Before this deal, iPhone users had to pay for apps using their telecom networks. That was probably also fairly easy, and can’t make China Telecom and the other telecom giants happy.
Apple has reportedly been at work on a deal like this for some time, but UnionPay was slow to return its overtures. Apple is fond of card-based payments because they are familiar to customers, but the company also seems to have a deal in the works with Alipay, China’s largest online payments system. Tim Cook expressed enthusiasm for this deal when it happened in October. Alipay does not currently work in the App Store.
“China is already our second largest market for app downloads,” said Eddy Cue, Apple’s senior vice president of internet software and services of the UnionPay deal. “We’re now providing users with an incredibly convenient way to purchase their favorite apps with just one tap.”
It won’t be long before China leads Apple in app downloads — and everything else.
