Quartz: An Alibaba-Apple Pay marriage could pit both companies against Beijing

ATN-300InsightaaS: The web is inherently global, but citizens and economies are subject to local regulation, and there is a growing tension between these points. The divide between global delivery and local consumption is sharpest in China, which launched "the Great Firewall of China" (officially, the Golden Shield project) in 2003 to censor content inconsistent with Chinese ideology, and has now extended to the new frontier of online exchange, epayments.

An article on Quartz, the "digitally native news outlet" launched in 2012, contains some interesting observations on the direction of epayments in China. It begins by noting that the CEOs of both Alibaba and Apple have expressed interest in joint payment initiatives. It then presents research demonstrating that Alibaba is the number two online payment provider in China, with 21% share (behind the 40% share of the Chinese state-owned China UnionPay, described by Quartz as "sort of like a giant Visa, MasterCard, and Amex rolled into one") and that Alibaba is by far the most successful third party online settlement processor in China. The article goes on to talk about Chinese state interests and interference, noting that both Alibaba and Apple have been experiencing issues in building traction (as with restraints on practices central to Alibaba's settlement mechanisms) and Apple's products (hacking of iCloud, lack of Apple Pay on iPhone 6 in China). The piece concludes by stating that "combined, [Alibaba and Apple] could potentially unite Alipay’s fast-growing payment system with China’s estimated 100 million iPhone users, who also happen to be some of its wealthiest and most sophisticated consumers–a union that is unlikely to receive Beijing’s blessing." Overall, the piece is more speculation than fact - but as those who remember when Kremlinology was a real issue will recall, sometimes that's the only way to decipher the meaning behind the actions.

Alibaba founder Jack Ma and Apple CEO Tim Cook are making noises about teaming up to tackle China’s multitrillion-dollar financial payments sector. But any combination of the two tech giants could put them on dangerous ground with the Chinese government, which has been fighting to protect the turf of its state-owned payment giant, and is already cracking down on both companies.

Ma announced at a Wall Street Journal conference last night that he would be "very interested" in partnering with Apple’s newly launched Apple Pay platform. "We’re going to talk about getting married later this week," Cook replied, offering high praise for an Alibaba team that was "wicked smart."

The appeal of China’s e-payments sector is obvious for both companies–online third-party payments there are expected to total 23 trillion yuan ($3.8 trillion) this year, a 35% increase from 2013. While growth is slowing slightly, the industry is still expected to expand by more than 25% a year until 2017, according to iResearch...

Read the entire post on Quartz: Link

  

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