Interest in Apple Pay seen spurring competition
Major Chinese phone makers are speeding up the promotion of their mobile payment services in response to aggressive efforts made by U.S. rival Apple Inc in the country's promising mobile payment market, analysts said Wednesday.
Huawei Technologies Co announced a partnership with Bank of China (BOC) late on Tuesday, allowing BOC card holders to use Huawei Pay, a contactless mobile payment service.
The company told the Global Times via e-mail on Wednesday that it would try to seek "cooperation with more banks to jointly promote Huawei Pay."
Having offered Huawei Pay on Mate S, its near field communication (NFC)-enabled smartphone, since September 2015, the company said it would apply the function to its other smartphone models in the second half of 2016.
Huawei Pay, which is similar to Apple Pay and Samsung Pay, enables users to pay for everything from meals to public transportation to goods via NFC - provided that the vendors also have point-of-sale (POS) terminals that support the technology.
However, Huawei Pay will not have a big effect on the company's phone sales domestically and globally, analysts said.
"Contactless mobile payment technology is already widely regarded as a feature that a smartphone should have, especially in China, where an increasing number of people are accustomed to mobile payment," Wang Yanhui, head of the Shanghai-based Mobile China Alliance, told the Global Times Wednesday.
Data from the China Internet Network Information Center showed that by the end of 2015, a total of 358 million Chinese users paid bills via smartphones, up 64.5 percent year-on-year.
However, this widespread interest does not mean the addition of mobile payment technology will drive up smartphone sales, said Wang.
Lin Qian, a 30-year-old Beijing resident, wants to try out Huawei Pay, but she said she would not buy a Huawei phone only for that reason.
"Huawei Pay seems convenient, but it is not a must-have function. Besides, I have third-party online platforms such as Alipay to meet my mobile payment needs," Lin told the Global Times.
It will be the same for Huawei's overseas business, Wang noted. "Also, consumers in overseas markets have not shown as much enthusiasm for mobile payment services as Chinese people."
For instance, Apple Pay has had relatively limited success in the U.S. market thus far. According to a report by CNBC on February 17 citing research firm First Annapolis, only 20 percent of iPhone 6 owners in the U.S. reported using Apple Pay at least once in December 2015, down from 22 percent in Spring 2015.
Apple betting on China
Apple is hoping for better results in China, having launched Apple Pay in the Chinese mainland on February 18. Apple Pay has partnered with 19 banks, including China Construction Bank and BOC, and over 30 million credit cards were reportedly connected to the service on the day it was launched.
Huawei said in its e-mail to the Global Times that it had made an earlier start in launching mobile payment services in China than Apple and Samsung. But analysts noted that the Chinese company has not yet seen a rapid expansion in users.
But Apple Pay's dazzling performance on its debut may have spurred domestic firms like Huawei to accelerate the development of their mobile payment services, said Wang.
Xiaomi Inc founder Lei Jun also thinks the mobile payment services sector is important, having said at a press conference in Beijing on Monday that the company's flagship smartphone Mi 5 would support such services "soon."
"Although smartphone makers are actively pumping up efforts in their mobile payment services, the industry will not take off unless China UnionPay updates most of its POS terminals to support NFC," Li Chao, an industry analyst with Beijing-based market consultancy iResearch, told the Global Times Wednesday.
China UnionPay, which holds a monopoly on China's payment processing network, had updated more than 7 million POS terminals as of September 2015, according to the latest data from the People's Bank of China.
Wang said that by the end of 2016, more than 50 percent of China UnionPay's POS terminals in China will be updated.
