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Apple reportedly plans to launch Apple Pay in China by February
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Apple Pay

Apple’s electronic payment service may finally launch in China as early as the first quarter of 2016.

According to reports, Apple Pay is expected to launch in February. The Cupertino, California, the tech giant has struck deals with China's four largest state-run banks that will allow Apple Pay users to link their local bank accounts to the mobile payments service.

Apple Pay, which was launched last year in the US and other countries, allows iPhone 6 and later iPhones and Apple Watch owners to pay for products on the go through the wireless technology NFC (near-field communication). An increasing 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 earnestly pushing mobile payments in the belief that the extra service will build customer loyalty. Apple electronic payment service users could possibly be more likely to retain their iPhones if they can store their payment data and use the device to buy items.

However, Apple electronic payment service will have to be expanded globally to gain more traction, since competitors such as Samsung Pay and Google's Android Pay start to make their presence known. As the largest potential market in the world, China represents a significant business opportunity for mobile payments systems.

Apple had been trying to reach an agreement with Chinese bank UnionPay, which is the only bank in the country that conducts interbank payments. That monopoly on credit- and debit-card processing effectively locks out MasterCard and Visa.

The company began the discussion with UnionPay in 2014 about using the bank's network for Apple Pay and had hoped that an agreement would be in place by March, however discussion ultimately fell through.

Since last year, Apple has also been in talks with nearly eight major Chinese banks about adopting Apple Pay. But even those talks haven’t gone well and the Industrial & Commercial Bank of China -- expressed no interest in a deal.

A major barrier to expanding Apple Pay into other countries has been the fees it charges to process transactions. In the US, it receives a cut of 15 cents for each $100 Apple Pay transaction. Transaction fees in other Apple Pay markets are considered high for banks in countries such as China and Australia.

Introduced in the US in October 2014, Apple Pay debuted in the UK in July and expanded to Canada and Australia this month.

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