China’s top payment service finished the week with a giant target on its back. Apple and Samsung threw down the gauntlet, announcing separate plans to begin offering payment services in China beginning next year. Both the American and Korean companies have reportedly already established deals with the state-owned bankcard network China UnionPay.
Alipay, China’s top business in the ecommerce payment field, now faces head-on challenges from two well-outfitted and well-funded international competitors. Will customers stay loyal to what they know, or will they chase a new player? Often, the answer to that question comes down to who can play the PR game better.
Regardless, it will be a tough hill to climb for either of the two newcomers. Alipay owns more than half of the third-party payment market in China and more than 82 percent of the mobile payments market. Expect the competition to be fierce, but, both Apple and Samsung are used to competition … and the prize is just so sweet.
China’s potential for online payments is massive…and still growing. In 2014, China had 304 million people using online payment options. This year that number jumped to 358 million – more than the entire population of the United States by more than 40 million customers. Those 358 million customers are expected to spend upwards of $1.4 trillion through mobile payment platforms in 2015 … and those numbers will only increase as more people get plugged into a wireless world.
Again, that’s a massive market … and, at this point, at least half of it is up for grabs. Even if either Apple or Samsung only grab a quarter of the market, that sort of foothold could be worth a fortune. But which company can deliver the convenience and price customers demand and portals expect? That remains to be seen. Apple is accustomed to giving people what they darn well please and expecting them to learn to want it. Meanwhile, Samsung has fallen into the trap of giving people too many options and suffering for it. Neither of those strategies will work in this scenario, so it will be interesting to see how they formulate and commence their attacks.
Elie Hirschfeld is a real estate developer and art enthusiast from NYC.