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Apple Pay's Chinese expansion hits bump in the road

Apple’s plans to expand its mobile e-commerce platform into China may have hit a significant hurdle, according to reports.

Sources indicated that talks with China’s state-owned credit and debit card operator, UnionPay, were ongoing but have now stalled.

Read more: Qualcomm faces record fine over China’s anti-monopoly law

UnionPay is the county’s only viable service for processing NFC payments, the technology at the heart of the Apple Pay platform, and as such is a vital partner for the Cupertino-based company. UnionPay is already used in combination with domestic e-commerce services like China Mobile, so it is not clear what exactly is causing the Apple stalemate.

Late last year, it was being suggested that Apple was on the verge of signing an agreement with Chinese firm Alibaba to bring Apple Pay to the Asian country as part of the Alipay NFC platform. However, it has since been revealed that because of UnionPay’s dominance of the NFC marketplace, even an Alibaba partnership would be subject to UnionPay usage rates.

According to Apple Insider, UnionPay’s fees for such a platform would prove too expensive to implement a sustainable service.

"[It] is a heavy price to pay for Alipay. We don't have an offline settlement system, and expensive POS equipment is unaffordable to us," an Alipay source explained.

Reports also indicate that the computer chips used in Apple’s iPhone 6 and iPhone 6 Plus may not adhere to national regulations, meaning the handsets would not be granted access to the systems required for any NFC platform to function.

Additional hurdles arise in the form of the national government, which would require all Apple Pay data to be held on servers located on the Chinese mainland, something Apple may be reticent to agree to.

Read more: UK banks and Apple Pay: Are they for it or against it?

While Apple Pay has been largely successful since its US launch in October last year, it has so far not seen an international release. Considering the many difficulties of a Chinese launch, Apple may have to make do with tackling European and other global markets, with a UK release rumoured to coming later this year.

Barclay Ballard
Barclay Ballard

Barclay has been writing about technology for a decade, starting out as a freelancer with IT Pro Portal covering everything from London’s start-up scene to comparisons of the best cloud storage services.  After that, he spent some time as the managing editor of an online outlet focusing on cloud computing, furthering his interest in virtualization, Big Data, and the Internet of Things.