IBS Journal March 2016
Apple Pay faces Chinese challenges In brief
EQ Bank, the new digital banking operation of Canada’s Equitable Bank, has gone live, using Temenos’ RetailSuite for such areas as core banking, analytics and channels. Equitable Bank’s VP of Digital
Banking, Dan Dickinson says: “This is an exciting new chapter for Equitable Bank as we launch EQ Bank and bring convenient online savings right to the fingertips of our customers. We are committed to outstanding custom- er service and effective risk manage- ment, which became the foundation for this branchless, experience-driv- en model. With Temenos’ RetailSuite, we have the ability to move quickly, adapt to our customers’ needs and refine the customer experience. I am proud with what we have achieved and in such a short amount of time.” Scott Thompson
Apple Pay has launched in China, in part- nership with UnionPay. As was the case with its US and UK roll outs, Apple is look- ing to team with the biggest local banks from day one, in this case the likes of ABC, CCB, CMB and ICBC. “Apple Pay has revolutionised the way millions of people pay every day with their iPhone, Apple Watch and iPad,” says Eddy Cue, Apple’s senior vice president of Inter- net Software and Services. “China is an extremely important market for Apple and with China UnionPay and support from 15 of China’s leading banks, users will soon have a convenient, private and secure pay- ment experience.” The tech giant has not had an easy time of its since rolling out the service in the US and UK, coming up against wary retailers and reluctant banks (in the UK, for instance, Barclays held off for some time
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before backing it; the FI will finally make it available to customers by March). And Chi- na will be an even harder market to crack, as consumers there are already keen users of mobile payment offerings, including an Alibaba-sponsored system Alipay which accounts for roughly 70% of mobile pay- ments in China and is also integrated into WeChat, the country’s most popular mes- saging platform. Things might, however, be made eas-
ier by the fact that Chinese banks will only have to pay half the leveraging costs of their US counterparts. A deal in China has been struck whereby its banks will be charged around 0.07% per transaction, compared to the 0.15% that the mobile giant charges Stateside. Matt Simester, Director of Cards & Pay-
ments, Piran Consulting, observes that Chi- na is a difficult place to launch products
© IBS Intelligence 2016
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that have originated overseas. He adds: “Local market joint ventures appear to me the most successful business model so it remains to be seen if Apple buck this trend. Perhaps the fact that Apple Pay halved its normal fees to enter the market may have something to do with it, along the same lines as they have had to in Europe to remain competitive. While China could be the largest market for Apple in addition to competitors like MasterCard and Visa, they will need to consider how to work along side such behemoths as Union Pay. That being said even a small slice of the world’s potentially largest payments market might be better than a modest slice of the Euro- pean market. However, adoption is slower than most of the media suggest in the US and Europe, so this needs to be a long- term play.”
Scott Thompson
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