Apple Pay enters China: UnionPay’s first step in turning around mobile payments

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The red envelope war during the Spring Festival is still lingering. People have gradually become accustomed to the excitement of being surrounded by red envelopes. With the persistence of "every penny counts", "shake" has swept across the entire Chinese land. Suddenly, everyone has become a thumb party, and mobile phones have become more and more inseparable. However, behind this popularity is mobile payment. In fact, mobile payment is not a new technology. With the migration of netizens to mobile terminals, wireless client shopping habits are gradually being formed. At the same time, with the continuous popularization of payment scenarios, the rapid development period of mobile payment has quietly arrived.

Mobile payment security is worrying

Mobile payment is certainly convenient, but it also faces a payment environment that is completely different from traditional bank card payment and Internet payment. Various new security threats to mobile payment are gradually emerging.

This year's CCTV "3.15" Gala exposed the fact that hackers used "phishing WiFi" in public places to steal users' private information, which made many people worry about the security of WiFi in public places. As mobile payment is becoming more and more popular, many mobile payment platforms have simplified payment operations in order to improve user experience, giving hackers an opportunity to take advantage.

Apple Pay: The most secure payment solution

Is there a mobile payment that is both secure and convenient? The answer is YES! Since Apple announced ApplePay in 2014, it has sparked great enthusiasm in the mobile payment market.

Heisler's research shows that Apple Pay is the first service to complete the EMVCo token standard, a new security framework designed to help emerging payments and, according to former credit card executive Tim Noyes, the "most secure payment solution in the world."

Apple Pay is based on technologies such as NFC, Touch ID, Security Element, Passbook, etc., among which NFC is the core.

Apple CEO Tim Cook said that there are currently about 750 banks and credit unions that pay, and two-thirds of transactions generated through the wireless payment platform are completed through Apple Pay.

He also pointed out that USA Technologies will embed Apple Pay into wireless payment terminals in 200,000 self-service appliances. According to the Nielsen report, USA Technologies is the sixth largest POS supplier. The company has added NFC technology to its ePort wireless payment products as early as ten years ago.

Apple Pay has made a great start since its launch, contributing 50% of McDonald's mobile payment transactions. Now, there are reports that the company is looking for opportunities to deploy Apple Pay in the popular fast food industry. In the automotive field, Chevrolet will introduce Apple Pay as another payment option later this year. Cook claimed: "2015 will be the year of Apple Pay."

Apple Pay is coming to China

In the early morning of March 10, Apple Watch officially debuted at Apple's spring new product launch conference. China mainland was listed as one of the first countries to launch the product. The high-end price of Apple Watch, like a luxury product, naturally attracted a lot of attention. However, the Apple Pay that came with the product, which had been released for 5 months, was still the focus.

Apple Pay has been used in the United States for five months. How is Apple Pay's layout in China's mobile payment field? Apple Pay seems to have strengthened its layout in the domestic mobile payment field. Due to its reliance on POS machines and the fact that China UnionPay's system is the only channel in China that uses NFC payment, the cooperation between Apple and China UnionPay is the key to Apple Pay's entry into China.

The cooperation between the two parties began in November 2014, when Apple App Store added UnionPay payment channel. Later, there were reports that promotional materials about Apple Pay had been posted at a branch of China Construction Bank. On February 10, when iOS 8.3 Beta was released, some people saw information that Apple Pay supported China UnionPay, but this information was quickly deleted by Apple.

The latest news obtained by Jiwei.com indicates that China UnionPay will hold a press conference for the entry of Apple Pay into China on April 15, and it will be officially launched on April 28.

At present, the two parties have not officially announced when Apple Pay will support China UnionPay. Although the time of entering the Chinese market is still uncertain, these evidences prove that it is just around the corner for Chinese people to use Apple Pay.

China UnionPay has a monopoly in NFC payments

NFC technology is a near-field data transmission method. Apple's offline payment uses NFC technology, uses Touch ID for encryption and verification, and puts user information in the "Secure Element", which is similar to the principle of placing Touch ID information in the "Secure Enclave". The user's payment information will be stored on a chip inside the phone, and the transaction information is only known to banks and merchants. When trading, the device can be placed close to the POS machine to complete the operation, and the whole process does not exceed 10 seconds. Apple Pay does not provide credit card numbers to merchants, nor does it store any bank card information. In other words, Apple is a complete third party, but only provides a complete set of technologies to realize the transmission of settlement information. The settlement link is still a matter between merchants, users, and banks. Online payment does not require NFC, and the card swiping action is completed by directly verifying the fingerprint. It can also be said that Enclave is Apple's TEE (Trusted Execution Environment) implementation method, which ensures the security of payment.

Apple Pay uses NFC technology, which can be used in an environment without a network. This is incomparable to platforms such as WeChat and Alipay, which rely entirely on the Internet to make payments, but it is necessary to ensure that the user is associated with the payment platform and the merchant's POS machine.

We know that in the US market, there are about 200,000 POS machines that support NFC payments. China UnionPay, as the largest POS machine manufacturer in China, has more than 30 million ordinary POS machines and about 4 million POS terminals that support NFC flash payment. Given China UnionPay's monopoly advantage in NFC transactions, other online platform operators do not have it. In addition to not having an offline settlement system, the high cost of POS equipment alone makes WeChat and Alipay stay away.

Currently, UnionPay is also preparing another "Apple Pay", planning to deploy mobile payment on the Android platform, which will be called "Android Pay" for the time being. It is reported that UnionPay may launch mobile payment services to the market in the third quarter of this year. Many mobile terminal manufacturers have also confirmed that they have had contact with China UnionPay. Obviously, the cooperation between UnionPay and Apple Pay is intended to build momentum for Android Pay. In the future, relying on Apple Pay and Android Pay, UnionPay will reverse the unfavorable situation in the field of mobile payment.

In fact, Alibaba is also negotiating with Apple about Alipay supporting ApplePay. Alipay has established in-depth strategic cooperation with more than 180 foreign banks and institutions such as VISA and MasterCard, and has the reputation of "Internet UnionPay". Alipay Apple Watch version has also passed Apple's review, with simplified functions, only retaining Yu'ebao, payment code, and exchange rate conversion. However, it is not yet known whether it will be used in a form similar to independent networking of mobile phones or in conjunction with NFC and fingerprint.

Alipay's strong online resources are certainly coveted by Apple, but offline payment, which has just started, may be the resource that Apple most urgently wants.