Alibaba Executive Chairman Jack Ma suggests that Apple and Alibaba Group Holding are in talks about a possible alliance that could bring Apple Pay to China, reports the Wall Street Journal. Actually, Jack Ma is reinforcing earlier rumours of discussions between the two parties, as he said that his company is interested in partnering with Apple in payments.
When Tim Cook presented Apple Pay, he stressed how big the market the iPhone maker is stepping into is: $12 billion daily in US transactions. A partnership with Alibaba would mean an open door to China’s online shopping market, 80% of which is controlled by Jack Ma’s company. China’s online shopping market was valued at around $302 billion last year, says the WSJ.
In fact, Alibaba already has a functioning electronic payment system called Alipay. A partnership between the two parties would reportedly mean the integration of Alipay into Apple Pay. Since Alibaba is interested in getting into offline payments, a partnership with Apple could make sense, analysts say.
For Apple, which recently launched its own payment system called Apple Pay, working with Alipay in China could give the company access to Alipay’s powerful transactions-settling system, which is already used by hundreds of millions of consumers and businesses. It would also let Apple take advantage of Alipay’s existing agreements with more than 200 Chinese financial institutions, which allow users to transfer money from their bank accounts to Alipay accounts.
There are challenges the two need to overcome, though: at this moment it is unclear how China’s financial regulator would respond.
But Apple has other partners to choose from if it enters the Chinese electronic payments market. There were rumours about a partnership with UnionPay, which has not yet materialized. Perhaps the two are working on the final details.