Apple Pay Overpowered by Tencent’s WeChat Pay

Apple issued an official statement today stating that its mainland Chinese users will now be able to use WeChat Pay for purchases made on the App Store and for Apple Music products.

The WeChat Pay function will not require the use of a password. Instead, consumers will be able to confirm their identity with fingerprints, which is meant to help ensure both the security and efficiency of their mobile transactions.

Apple’s adoption of WeChat Pay is seen by many as confirmation of massive Chinese internet investment holdings company Tencent’s dominance in the Chinese mobile payment market. Specialists have already noted that in China, WeChat Pay, powered by Tencent, has long been solidified into the country’s socioeconomic fabric, and the platform currently boasts 963 million users.

It is important to note, however, that not all Apple users will have access to this new platform. Only the latest iOS 10 and iOS 11 systems will be able to support WeChat Pay.

Still, in the face of such staunch competition as Tencent’s WeChat Pay presents, Apple has had significant trouble entering the Chinese market since it introduced its own Apple Pay function to China in 2016. As Beijing-based internet analyst Liu Dingding stated in an interview for Global Times, “In China, consumers can do without Apple mobile phones by switching to other brands, but they still can’t find a replacement for WeChat.”

Tencent is not the first native Chinese company to strongarm Apple into a corporate partnership using the sheer volume of its user base. In November 2016, Apple enabled users to use Alipay, Alibaba’s mobile payment platform, to make purchases from its app store.

It is well-known amongst those familiar with the Chinese market that Chinese consumers are quickly abandoning cash in favor of mobile payment platforms, like WeChat Pay and Alipay. According to TechNode, a recent study conducted by WeChat in China found that as much as 74% of respondents believed they could survive with less than 100RMB (about US$15) of cash on hand at any given time.

Originally, Apple had hoped to cash in on this growing consumer demand for mobile payment services in China by launching its own platform. Like so many companies before it, however, it quickly found that its more-established Chinese competitors have a powerful grip on their native consumers, and there is no sign that this will change any time soon.

Nevertheless, Apple, with a US$815 billion market capitalization, is far from backing down against WeChat, which has a market cap of US$378 billion. It reportedly rejected WeChat’s attempted launch of an app in its social networking app earlier in 2017, an apparent attempt to suppress the erasure of its own ecosystem.

It is also not clear whether WeChat Pay will be able to secure Apple as many users as Alipay already has. In the past 90 days, the number of Apple’s users on iCloud and in the Apple Music Store, which support the Alipay function, increased 12 percent to 185 million. It is believed that the adoption of Alipay is the reason for this increase.

Liu also noted, however, that Apple and Tencent have incentive to work in tandem for future endeavors. “In general,” he notes, “Apple needs the social network resources from Tencent [to penetrate the Chinese market].” He added that “it won’t be long before the companies launch a big, strategic cooperation.”

It is clear that, going forward, if Apple wants to reach a wider Chinese audience, it will have to work concurrently with Tencent and Alibaba.

Read more at: China Money Network, Global Times, and TechNode.

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