Apple Inc. (AAPL) Partners With China’s Biggest Bankcard Network


Apple Inc.(NASDAQ:AAPL) made an announcement for its App Store customers in China that they can make purchases using their UnionPay debit or credit cards as those can now be linked with their Apple IDs. China’s UnionPay is a bankcard network that enjoys virtual monopoly and has the approval of both the China’s State Council and the People’s Bank of China, and this makes this significant for the Chinese customers and also for Apple’s.

UnionPay – a major Chinese bankcard network

China is the most important growth market for Apple Inc. (NASDAQ:AAPL) with roughly 100 million iPhone users. The company recently released its earnings report informing that of the total net sales in 2014, around 16% or $29.8 billion has been generated from the Chinese market only. Considering this, the partnership between Apple and UnionPay is significant for both firms.

UnionPay is a major Chinese bankcard network with availability in all the cities of China and also in overseas market. More than 4.5 billion cards have been issued by it in China itself. The only interbank network in mainland China that has been linked with all ATMs is China UnionPay. For processing payments in the local currency, all ATMs and Chinese merchants are required to use UnionPay only as per the government regulations. Also, the foreign credit card companies including Visa, MasterCard and American Express are also required to abide by the same government regulation and they are also required to pay a fee for each transaction to UnionPay.

Suspense over Apple, Alipay link-up

The alliance with UnionPay follows an earlier news regarding link-up between Apple Inc. (NASDAQ:AAPL) and Alipay. UnionPay overwhelmingly dominates the physical retail market, despite the fact that China’s largest online payments system is Alipay. For Apple services, including the App Store, there is no availability of Alipay as yet.

No official announcement has been made regarding the partnership between the two tech giants for now, but it seems likely. Recently, Cook visited China, where he gushed Alipay, saying “we love to partner with people that are wicked smart, that have flexible teams, that are product based and we like to push them. I think Jack [Ma, Alibaba Group’s founder] has a company just like that.”