Apple Pay to launch in China this week
Apple's head Tim Cook announced the launch of its digital wallet service, Apple Pay, in China, after an alliance between Apple Pay and China UnionPay, a state owned bank card association was finalized. With 68% of China's population owning smartphones, digital wallets are poised to grow big in the country. Apple Pay will be reportedly supported by 20 other bank lenders in China.
What is Apple Pay?
Apple Pay is a single-touch mobile payment and digital wallet service launched by Apple Inc., aimed at replacing physical credit cards. It eliminates the need to share information with the merchant or entering of card numbers. The service is compatible with Apple's latest devices, the iPhone 6, 6 plus and Apple Watch, that are embedded with special chips to enable secure financial transactions.
The mobile payments market
The mobile payments market is estimated to grow to $1 trillion by the year 2017. Other than Apple Play, players include Google's Android Pay and Samsung Pay. Most services are limited to the US and a few other countries.
How does Apple Pay work?
Card information is added to Apple Pay by photographing cards from banks that have authorized the service. Newer iOS devices contain the Near Field Communication Chip, that allows the phone to wirelessly transmit card information between banks and sales terminals. Card information is encrypted to ensure secure transactions. Purchases are validated by TouchID, the Apple biometric technology embedded in its iOS devices.
The overheads in using Apple Pay
Apple takes a 0.015 per cent cut for every financial transaction made. Merchants must pay a fee between 1 to 2% for every Apple Pay transaction.
Apple Pay's US launch garners early success
Apple's CEO Tim Cook introduced Apple Pay during the launch of the iPhone 6. Within 3 days of the launch , Apple Pay went on to amass 1 million users to become US's largest mobile payment service. Over 300 banks, including Bank of America, Capital One and Chase tied up with Apple Pay to provide services at around 220,000 merchants, including McDonald's and Walgreens.
Success stories of merchants using Apple Pay
In January 2016, US-based Panera Bread stated that 80% of its online payments were through Apple Pay. At the same time, Whole Foods reported an 80% increase in payments through Apple Pay.
Apple launches in UK, Canada
Apple Pay's rapid tie-ups with banks and retailers across countries led Apple's CEO Tim Cook to announce that 2015 would be the 'year of Apple Pay'. In July 2015, Apple Pay was rolled out in the UK with services becoming available across 25,00,000 retail stores in the country. In November 2015, Apple Pay went live in Canada.