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Chinese Apple Pay launch delayed by stalled bank negotiations, maybe UK too

The launch of Apple Pay in China, originally expected to be part of iOS 8.3, has been delayed by stalled negotiations with both the state-owned card processor UnionPay and Chinese banks, reports MarketWatch. Developers had originally been told that iOS 8.3 would support UnionPay, but found that support was missing when the update rolled out last week.

A UnionPay employee who declined to be named said the company has not reached any agreements with the U.S. tech company, and no timetable for cooperation has been set […]

Those sources also say Apple has not made any breakthroughs in talks with Chinese banks, which would also have to agree for the Apple Pay system to work.

The banks are reportedly unhappy about the cut Apple takes from each transaction … 

In the U.S., card processors typically charge 2% for each credit card transaction, and Apple takes 0.15% from that slice. While the percentage is small, high transaction volumes mean that the total sums involved are substantial.

Chinese banks argued those charges were too steep, an employee of a large bank said. Many large banks that are already part of mature point-of-sale networks do not want to lose such a large percentage of their profits in a deal with Apple Pay, he said.

While Apple could begin the Chinese rollout with a limited number of banks, it cannot do so without UnionPay as the payment processor has a monopoly on card processing in the country.

There have been reports that Apple has hit similar issues with UK banks, meaning that Apple Pay will not launch in the UK in the first half of the year as had been widely expected.

The rollout of Apple Pay in the U.S. continues, with more than 180 banks and other financial institutions on board, and the payment method accepted at a total of 68 merchants.

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Comments

  1. Cognomen - 9 years ago

    We already have a problem with greedy bankers in the UK – I wonder if this is just another example of bankers insisting on extracting the last penny out of the public whilst paying themselves millions?

    I would like to think that the financial market has realised that the public does have a say in the banks’ affairs and that the first bank to break ranks and use Apple Pay, is in for a big boost to its membership.

  2. 89p13 - 9 years ago

    I just hope that Apple maintains its strict policy on security. Seems that China wants a little too much information on other Apple software.

    Screw China if that security knowledge is part of the problem!

  3. Soluble Apps - 9 years ago

    Won’t be long before Apple has enough money to BE the bank itself!

    Shame about the UK, I was really looking forward to using it soon.

  4. Typical UK banking sector being idiotic and not working for, but against, the consumer, their customers. US banks and credit unions are fine with Apple’s terms, and seem to see the benefit of making customers happy by offering them a secure and efficient new payment method. Greed and stupidity rules Britannia these days :-(

    • Soluble Apps - 9 years ago

      Of course the difference is that the US banking system was still in the dark ages, and was still relying on signatures as a method of security until this year, so they were due for a change.

      • vpndev - 9 years ago

        Even with the chip card rollout it will still be dependent upon the never-checked signatures. The critical thing is to get away from the cloneable mag stripe

  5. peterplant - 9 years ago

    Visa/Mastercard etc. are only just (alert in April) launching tokeniz(s)ation, which is essential for ApplePay, so I don’t think that a UK delay can be blamed on the banks quite yet.

    If you look at the US list, Barclays, HSBC and more are already signed, so I would expect their UK arms to follow?

  6. peterplant - 9 years ago

    I hope they can reach an agreement, everything that I have read about people using ApplePay in the US, combined with the almost ubiquitous presence of NFC readers in UK stores would be a powerful service. A WWDC announcement of a european expansion perhaps now most likely?

  7. dvdv0815 - 9 years ago

    In the EU there is a new law that the charges for using credit cards will be capped to 0,3%! Until now it was 1,8% on average for MasterCard and Visa and 2% for Amex. For Visa and MasterCard it will start this year and Amex has a little more time.

    I wonder how this will affect Apple Pay all over Europe because I bet it will be much harder to negotiate a deal when the income of the card distributors goes down the drain.

  8. GadgetBen - 9 years ago

    What we are all missing here is that most retailers still haven’t got their heads together around contactless card payments, let alone Apple Pay!

    I’ve been to several high Street big-name stores in the UK regularly over the last 4 months and while most of their terminals have been upgraded to show that contactless payment is available, I keep getting told that they aren’t connected so they won’t work !

    That’s just Corporate inefficiency

    • Cognomen - 9 years ago

      Like it GadgetBen!

      The ogre of Corporate Inefficiency is indeed alive and well.

      Unless our high street stores manage to replicate John Lewis and Waitrose (the food arm of JL) as an example, in terms of customer service and pricing policies, we are on a hiding to nothing.

      Yet again, America is teaching us in the UK how to sell – it’s about time we learned!

    • Gazoo Bee - 9 years ago

      Yeah, except Apple also promised to be working in Canada already, and Canada has about a decade or experience with contactless payments. It took a while to spread, but it’s been working here in pretty much every store, restaurant and coffee shop for at least five years.

      • Thomas Yoon - 9 years ago

        As antsy as I am awaiting for Apple Pay Canada, Apple themselves never announced anything. Apple in my eyes keeps its deadlines.

        From what I recall, a report was released stating they had marketing for its release ready for March, but seeing that they never showcased this marketing, my guess is they’re still fighting the stubborn bigwigs of the Canadian banks about something trivial, like fees.

  9. Noy Moshe Kedem-Hadar - 9 years ago

    I honestly don’t understand how Apple is releasing Apple Pay in the UK and China before releasing it in Canada. This is so weird to me.

    • Thomas Yoon - 9 years ago

      I’m quite disappointed I still can’t use Apple Pay as a whole, but I was at least hoping that it would be released here in Canada in time for the Watch release. I’m holding onto that small hope that Apple might release some sort of 8.3.1 surprise update that releases it right alongside the watch, but with our conservative Canadian banks controlling everything, I can’t honestly see it happening.

      • Gazoo Bee - 9 years ago

        Well, Apple has already missed the deadline for Canada that they themselves announced. It would be nice if they at least told us what the problem was. At least for China we now have an answer.

  10. absarokasheriff - 9 years ago

    The iPhone transaction security is top notch with tokenization and Device Account Numbers. So Apple’s costs are really onboarding and then the credit card networks do the work. Along with the initial R&D. I bet they have not paid a dime for a transaction related fraudulent case.

    So for the purpose of selling more iPhones and making iPhones stickier along with Apple Watches. I would think Apple could either charge a one time onboarding fee or just divide the fee in 10.

    I think the bigger issue is that the banks and credit cards don’t want to lose their identity. They want you paying with MasterCard, Visa or American Express not with Apple Pay. Unfortunately, this is preventing European and Chinese customers from getting the highest security in their transactions.

    Just like Microsoft has applied for a license for payments in all 50 states. Apple may have to compete directly by forming its own bank. That threat is probably the only thing that will get them to come on board.

  11. Gazoo Bee - 9 years ago

    “Coming to Canada in early 2015”

    You would think that Apple would at least make a statement about this stuff since they have 100% missed their deadlines in all major countries outside of the USA.

    • Thomas Yoon - 9 years ago

      This is not a direct quote from Apple. Apple’s Canadian pages downright exclude any mention of Apple Pay altogether. We’ll just have to wait patiently until Apple eventually wins against the conservative bigwigs up here. And they will win.

  12. tomtubbs - 9 years ago

    Doesn’t affect Visa Europe’s April announcement of HCE and tokenisation – the UK banks can bicker all they want – they know that there’s only 1 spot for the primary card in a user’s Passbook – once one get’s in, the other’s will have pressure to fall into line, as per the US market. With Barclaycard already announced, i’d imagine there’s some incentive for Barclays to join for starters.

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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