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Apple Pay reportedly to launch in China by February

Deal with four banks clears the way for the tech titan's electronic-payments service to work in the world's largest smartphone market, sources tell The Wall Street Journal.

Apple has apparently struck deals with China's big four state-run banks.

CNET

Apple Pay may arrive early next year in China, the biggest smartphone market in the world.

Apple's electronic-payments service is expected to launch in China in February, according to The Wall Street Journal. Sources told the newspaper that the Cupertino, California, tech giant has struck deals with China's big four state-run banks. The deals will allow Apple Pay users to link their local bank accounts to the mobile-payments service.

Apple representatives did not respond to a request for comment.

Launched last year in the US and then in other countries, Apple Pay enables owners of the iPhone 6, iPhone 6S or Apple Watch to pay for items on the go via the wireless technology NFC (near-field communication). A growing number of banks and retailers in the US have been offering Apple Pay, which has support from all four major US credit cards.

Companies are eager to push mobile payments in the belief that the additional service will build consumer loyalty. Apple Pay users, for instance, could potentially be more likely to stick with iPhones if they can store their payment data and use the device to buy shampoo, beer and gum.

To gain more traction, though, Apple Pay needs to expand globally, especially as rival services such as Samsung Pay and Google's Android Pay start to make their presence known. As the largest smartphone market in the world, China represents a significant business opportunity for mobile-payments systems.

The company had reportedly been trying to reach an agreement with Chinese bank UnionPay, which is the only bank in China that conducts interbank payments, MarketWatch reported. That monopoly on credit- and debit-card processing effectively locks out MasterCard and Visa.

Apple began talking with UnionPay last year about using the bank's network for Apple Pay and had hoped an agreement would be in place by March 2015. But Apple's relationship with UnionPay has been rocky, people close to the talks told MarketWatch.

Since last year, Apple has also been chatting with at least eight major Chinese banks about adopting Apple Pay. But those talks had not gone well either, a source close to them told MarketWatch. One bank expressed no interest in any deal.

A major stumbling block to Apple Pay's expansion globally has been the fees it charges to process transactions. In the US, it reportedly gets a cut of 15 cents for each $100 Apple Pay transaction. Banks in other countries have balked at the transaction fees.

Launched in the US in October 2014, Apple Pay debuted in the UK in July and expanded to Canada and Australia this month.

CNET's Lance Whitney contributed to this report.