Can Apple Find Success with Apple Pay in China?

(Continued from Prior Part)

China’s growing third-party mobile payments market

In the previous part of this series, we discussed how Apple (AAPL) plans to enter China. We also saw how established players like Alibaba (BABA) and Tencent can provide stiff competition to Apple in China’s online payments market. Despite the robust competition, Apple is looking to find success in this fast-growing market in China.

According to a report from iResearch China, China’s third-party mobile payments GMV (gross merchandise volume) could grow from 5.99 trillion yuan in 2014 to 18.26 trillion yuan in 2018. This is a healthy compound annual growth rate of 32%.

Apple looks to enter the person-to-person money transfer market

In addition to entering China’s mobile payments market, Apple has started to make its presence felt in Australia (EWA), the UK, and Canada. In addition to entering newer markets for Apple Pay, Apple is also looking to leverage the other fast-growing segment of the electronic payments market.

According to a report in the Wall Street Journal citing those familiar with the matter, Apple could launch its person-to-person money transfer service by next year. PayPal’s (PYPL) Venmo service is the leader in this market while Square (SQ) is another player in this market. Square recently went public, and its current valuation is slightly less than $4 billion.

According to PayPal, $2.1 billion in mobile payments were made from the Venmo service in 3Q15, up from $700 million in 3Q14, as the chart above shows. This tremendous growth indicates the potential that this market possesses for Apple.

Browse this series on Market Realist:

• Part 1 - Can Apple Find Success with Apple Pay in China?