Alibaba Group Holding Ltd, Apple Inc. In Talks To Launch Apple Pay In China

Apple CEO Tim Cook said in an interview with the state-run Xinhua news agency that the Cupertino company was in talks with Alibaba to launch its Apple Pay service in China. Cook said he was “very bullish on Apple Pay in China.” The iPhone maker’s mobile payment service allows users to pay for items by holding up their iPhones to a reader.

Alibaba open to partner with Apple

Apple Pay was launched in the United States in September. Within months of its launch, the service started handling more transactions than the all other “contact-less” methods combined. China is Apple’s second-biggest market by revenue. According to data from research firm IDC, the Cupertino company has become the largest smartphone vendor in China with 14.7% market share, beating Xiaomi, which has 13.7% share.

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Alibaba founder Jack Ma said in October that his company was open to partner with Apple on Apple Pay. Alibaba’s Ant Financial, which operates Alipay, is the largest payments service provider in the country. However, Apple Pay’s expansion in China may face some challenges. Apple’s payment service uses NFC technology. In China, state-owned UnionPay dominates the NFC-based payment processing segment.

How can Alibaba help Apple?

According to CNBC, UnionPay sets the transaction fees, which could be a roadblock for Apple in the world’s most populous country. That’s probably one reason the Cupertino company is interested to team up with Alibaba, which owns Alipay. Alibaba could help Apple navigate the regulatory hurdles.

Alibaba’s payment platform uses different payment methods such as scanning a barcode. Alipay is also testing other authentication methods including taking a selfie to authorize the payment. It’s still unclear how the two companies would work together. But a partnership with Alibaba will give Apple a way into the Chinese mobile payments market.

Tim Cook was in China to launch environmental initiatives to protect forests. Cook also joined Sina Weibo, the Chinese version of Twitter.

Alibaba shares fell 0.24% to $86.51 in pre-market trading Tuesday.