Apple has launched its biggest promotional campaign for Apple Pay in China since the payments platform was introduced in the country several months ago. The promotion is slated to last one week beginning on July 18 and ending on July 24.
During the promotion period, shoppers will be offered discounts of up to 50% on their purchases. Alternatively when shoppers use Apple Pay instead of credit cards at selected outlets, they will receive 50 times more points than what they usually get from the card merchants. 17 banks, 18 online retailers and 28 brick and mortar retailers are participating in the promotion.
“Our goal is for all Apple users to use Apple Pay,” Apple Pay’s vice president, Jennifer Baily, said.
Currently China is the most challenging market for Apple Pay. Two companies already enjoy dominance thereby ensuring that Apple’s payment platform is unlikely to get a significant market share. These two firms are WeChat Pay and Alipay which when combined are in control of more than 90% of the mobile payments sector in China according to statistics from the first quarter of 2017. While WeChat Pay has a 40% market share, Alipay has a 54% market share.
Another challenge that Apple Pay is facing in China is the fact that iOS lacks a significant market share in the world’s most populous country. While the market share of iOS rose in the urban areas of China has risen, it is still only about 16%. During the same period the share of the market that went to Android was 83%.
Despite the relatively small market share, the potential volumes in transactions are huge. Last year the amount that consumers in China spent on mobile payments was $5.5 trillion making the country the biggest market on the globe for these kinds of transactions. This means that even if Apple only secured 5% of the market, it would translate to transaction volumes of about $275 billion annually.
Additionally, such volumes would translate to wider acceptance of Apple Pay in markets outside China forcing an increasing number of merchants to come on board the payments platform. This is especially true in light of the fact that China has a huge number of outbound tourists who are also known to be high spenders.
In 2015 tourists from China spent approximately $215 billion at their overseas destinations. This was an increase of 53% from what they had spent in 2014. With such figures merchants would have no reason not to adopt Apple Pay since they would not want to miss out on this spending.