Apple’s plan to bring Apple Pay to China have stalled

Apple has repeatedly made it clear that it is very interested in bringing Apple Pay to China and other markets of the world. In fact, the first iOS 8.3 beta seeded by the company to developers last week had support for China UnionPay in Apple Pay. 

However, it looks like the company’s efforts have hit a roadblock with its talks with UnionPay stalling. In addition, Apple is yet to acknowledge regulators, which has led to a confusion as to whether or not Apple Pay even meets the government’s requirements before the service can be launched to the public.

The central bank official who asked not to be named said regulators have not intervened in negotiations between Apple and UnionPay, which began last year and were reportedly aimed at an agreement by March.

Many regulators who looked into how Apple Pay worked have already raised doubts about its compliance with Chinese regulations and security standards. For access to any NFC system in China, the NFC chip used by Apple in the iPhone 6 and iPhone 6 Plus should be compatible with PBOC 3.0, which it is not apparently.

In addition, a central bank employee in China told Caixin that the Chinese government wants Apple to open a data center in mainland China to store the customer-related information of its Apple Pay clients so as to “prevent data leaks.”

Other people from the industry believe that UnionPay does not want Apple Pay to enter the Chinese market as it does not want to lose its prowess over the financial transaction market in China.

“Letting Apple Pay enter China will have a profound impact” on the payment market, said a financial sector source. “For UnionPay, cooperating with Apple means opening its settlement system. It would be hard to say who’s in control.

Sources also suggest that Apple has been in talks with eight different banks in China, but talks have stalled because of the profit-sharing ratio. Apple charges 0.15 per cent of the 2 percent fees that is paid by merchants. However, many sources believe that this rate is too high and since support for Apple Pay will not give any bank a significant competitive advantage over others, it is unlikely that anyone will accept this offer from Apple.

[Via Caixin]