Two phone giants have announced they will roll out mobile payments services in China in 2016.
Both Apple and Samsung made announcements on Friday that they will bring their mobile payment services — Apple Pay and Samsung Pay — to users in the world's most populous country.
To make this happen, they've inked separate deals with China UnionPay, the country's interbank network, so their services will be extended to account holders with most of the banks in the country.
UnionPay also has a reported 5 million contactless point-of-sale payment terminals in China, so Samsung phones and Apple iPhones newer than the iPhone 6 are likely to work with them.
Launching with a large network of banks will allow the companies to avoid some of the snags encountered in other countries. In Australia, for instance, Apple Pay rolled out only on American Express, and not the country's four large banks, which has made the service less popular with users and retailers which want to avoid AmEx's fees.
It won't be easy to dominate Alipay
But a UnionPay hookup isn't all there is to cracking the mobile payment pie in China.
China's mobile payments space is dominated by Alibaba's Alipay service, which in 2014 commanded over 80% of the market. Alipay says it has some 400 million registered users too, which is more than twice the size of PayPal's userbase.
Alipay is nearly ubiquitous in large cities in China, where people use it over-the-counter in stores, in taxis and and to pay for bills.
Forrester researcher Di Jin didn't seem too optimistic about Apple's nor Samsung's chances against Alipay. He told Mashable in an email that Apple and UnionPay's partnership "is unlikely to help Apple gain more users from their competition, despite UnionPay’s existing mobile payment alliances with banks and internet companies."
"Alipay remains the industry’s dominant player, which Apple Pay would find difficult to surpass in the near future.""Alipay remains the industry’s dominant player, which Apple Pay would find difficult to surpass in the near future."
And Samsung faces an even greater battle, the analyst said. Samsung's smartphone share in China has been on the decline, faced with strong domestic competition and the persistent popularity of the iPhone.
"Even if Samsung were to introduce its mobile payment function, it will not be a major selling point for consumers. Nevertheless, Samsung does not want to fall behind Apple in the mobile payments market, and has negotiated with UnionPay for a long time for this partnership," he said.
Besides Alipay, Apple and Samsung will also have to tussle with other large Chinese companies that have managed to stake out their own parts of the mobile payments space in China, by tapping their existing users.
Tencent WeChat, for example, is the country's dominant messaging app with around 500 million active users, and 200 million users' credit card information.
WeChat allows people to pay their bills and transfer money to each other easily with a phone number, so you don't need to fumble with bank transfers. It even includes a bill-splitting calculator in its app, which can text a group of friends with a prompt to pay with a click.
