Apple's App Store Now Accepts World's Most Popular Payment Card

China's UnionPay Is Huge, and Apple's Chinese Customers Want To Pay With It

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Apple CEO Tim Cook.
Apple CEO Tim Cook. Credit: Noah Berger/Bloomberg
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The most common payment card in the world isn't Visa or MasterCard. China's 12-year-old UnionPay brand accounted for 38% of the world's cards in 2013, compared to Visa (24%) and MasterCard (18%), according to London-based research and consulting firm RBR.

Now consumers in China, the world's largest smartphone market, can use UnionPay to pay for purchases in the Apple App Store, Apple said Monday.

It's a step forward for Apple as it nails down its path on mobile payment in China, where paying for taxis, restaurants and shopping via smartphone is already well-developed. (Apple Pay isn't in use yet in China. There's been buzz about a possible collaboration with e-commerce giant Alibaba and its third-party payment solution, Alipay, after founder Jack Ma said he was open to the idea.)

More immediately, in terms of App Store purchases, the deal with UnionPay will make it easier for many customers to pay. State-backed UnionPay has crowded out international players in China, which has promised to open up its card market after a World Trade Organization ruling that the country discriminated against foreign companies in the sector. But UnionPay is already well-established: It's issued 4.5 billion cards, according to Apple's statement.

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"The ability to buy apps and make purchases using UnionPay cards has been one of the most requested features from our customers in China," said Eddy Cue, Apple's senior VP of internet software and services. The new offering provides an "incredibly convenient way to purchase their favorite apps with just one-tap," he said.

There are several existing ways to pay at the App Store: through cards bearing an international logo like Visa (used by China's educated urban professionals), by topping up an account with a pre-paid sum, or by buying a gift card online.

Junde Yu, VP for Asia Pacific for AppAnnie, said the UnionPay deal would be most helpful for high school and college students and blue collar workers, because they don't typically use international credit card brands.

Apple "is paving the groundwork for the future because China is a huge market for them," Mr. Yu said. China was the No. 2 country worldwide for iOS downloads in the month of September 2014, and the No. 3 for iOS revenues, after the U.S. and Japan, for the same month, he said.

"I think it's a start in terms of providing infrastructure, the start of more formal partnerships in China," Mr. Yu said. "Alipay and Tencent's WeChat Payment would also be very valuable partners. The whole apps revenue business in China is relatively new, though paying for a lot of other more expensive stuff on mobile is not new. People are used to paying for all types of services -- phone bills, taxis, train tickets, restaurants, e-commerce purchases -- because China, as a mobile-first country, is very rapidly developing the whole suite of mobile services to bring convenience, goods and services to the masses of consumers."