Apple Pay still struggling to win support in China
iPhone users in China may have a long wait before getting Apple's mobile payments system. Negotiations with the only bank in the country that conducts interbank payments aren't going well, says a new report.
Apple Pay is facing an uphill battle trying to grab a spot in the world's largest smartphone market.
The company has been trying to reach an agreement with Chinese bank UnionPay, which is the only bank in China that conducts interbank payments, MarketWatch said on Monday. But talks between Apple and UnionPay don't seem to be going too smoothly.
Launched in October in the US and other countries, Apple Pay enables iPhone 6, iPhone 6 Plus and Apple Watch owners to pay for items on the go via the wireless technology NFC (near-field communication). Apple has been trying to gain support for the service among US banks, retailers and other businesses. Meanwhile, China is the largest smartphone market in the world and so represents a significant business opportunity as Apple Pay tries to expand globally. But negotiating with UnionPay and other Chinese banks is proving difficult.
Last year, Apple began talking with UnionPay about using the bank's network for Apple Pay and had hoped an agreement would be in place by March. But Apple's relationship with UnionPay is struggling, people close to the talks told MarketWatch. An unnamed UnionPay employee said the two have not reached any agreement, and no timetable for a potential deal has been set.
The latest report from MarketWatch follows a report in February in which sources close to the companies told MarketWatch that Apple's discussions with UnionPay had stalled.
When Apple sent developers a beta version of iOS 8.3 in February, the company said the new version would support UnionPay, Marketwatch said. But iOS 8.3 launched last week without any such support.
Since last year, Apple has also been chatting with at least eight major Chinese banks about adopting Apple Pay. But those talks have not gone well either, a source close to them told MarketWatch, and one bank -- the Industrial & Commercial Bank of China -- expressed no interest in a deal.
Why is Apple Pay getting the cold shoulder in China? One source cited profits as an obstacle.
Apple gets a 0.15 percent cut of the 2 percent fee paid by retail merchants for each credit card payment and half a penny for each debit card payment conducted through Apple Pay. But the Chinese banks consider that amount too high, an employee of one large bank said, and don't want to give up such a large percentage to Apple.
In the US, Apple Pay is supported by three major credit cards -- Visa, MasterCard and American Express. The payments system has also won approval from most of the top banks in the US. But expanding Apple Pay to certain countries abroad seems to be proving more of a challenge.
A report late last year from Britain's Daily Telegraph said that Apple Pay might land in the country during the first half of 2015. But a later report said it would be put off to the second half as Apple continues to try to convince banks to support the service.
Apple did not immediately respond to CNET's request for comment.