Apple said to plan Apple Pay launch in China by February

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

CNET

Apple Pay may make its debut 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 that 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 other countries, Apple Pay enables owners of the iPhone 6 and later iPhones and the 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 using the payment service, 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 keep their 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. 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. But Apple's relationship with UnionPay has been rocky, pe ople 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, and one bank -- the Industrial & Commercial Bank of China -- expressed no interest in a deal.

A major stumbling block to that expansion into other countries 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 countries such as China and Australia seem to be balking at those 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.

Source: Apple said to plan Apple Pay launch in China by February