Samsung Pay in China
Samsung Pay was launched in China on Feb. 18, following Apple Pay. Regarding the launch, some analysts interpret that the competition is heating up over the offline payment service market between banks and online payment service providers like Alibaba rather than among smartphone companies such as Apple and Samsung.
As the China Union Pay (CUP), a Chinese alliance of banks and card service providers, has sought to provide mobile payment services by joining hands with Apple and Samsung, Chinese banks follow suit by forming “alliances” with smartphone companies. The CUP, which was established in 2002 as an alliance of Chinese banks and credit card companies, enjoy the transaction payment network as Visa Card and Master Card do.
Samsung Pay supports the check and credit cards of nine major banks in China, including ICBC, China Construction Bank and China Citic Bank. Users can use the service like a traditional credit card by registering the card on a smartphone that is supported by Samsung Pay. Six more Chinese banks, including Bank of China and Bank of Beijing, will join the list. Apple Pay is also available in China by finishing its registrations with cards of 15 local banks.
As CUP recently announced that the company will jointly provide a mobile payment service with Huawei, banks also will provide the service through Huawei Pay.
Industry watchers say the alliance between banks and smartphone companies came in to counter Alipay, which is dominating the Chinese mobile payment service market. As it were, banks, which were threatened by Alipay that expanded its business territory to the offline market, launched their counterattacks against Alipay by joining forces with smartphone manufacturers. It means that a “horrible invader” has appeared in the offline payment service market where the CUP occupies more than 80 percent share. Alipay charges retailers only 0.6 percent transaction fees, which are 0.38 to 1.25 percent points lower than those imposed by bank cards. Furthermore, Alipay didn’t practically charge retailers transaction fees last year by providing subsidies.
According to Analysis International, a Chinese market researcher, Alipay occupied a 73 percent share of the Chinese mobile payment service market. The number of third-party payment service institutions like Alipay reaches about 200 in China. Alipay is enjoying the dominant position, followed by Tencent’s Tenpay that occupies 13 percent share of the market.