Apple Inc. and Alibaba Group Holding Ltd.: Real Deal or Not?
Vittorio Hernandez | | Nov 05, 2014 03:29 AM EST |
Payment and retail industries experts doubt if the deal between Apple and Alibaba Group Holding will push through. They cited Apple's current partnership with UnionPay, as well as the limited scope that AliPay could offer the Cupertino-based tech giant.
Valuewalk cited Chen Jianwei's opinion that because of UnionPay's leading position in offline payments as well as its extensive network of point-of-sale machines, the service provider offers the best option for Apple and this situation would likely remain for a long time.
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There's also the bonus that Beijing supports UnionPay. The government support paved the way for the creation of new bankcard associations.
Speculations of a partnership between Apple and Alibaba, which successfully raised a record-breaking $25 billion capital during its initial public offering in September in New York, swirled after Apple CEO Tim Cook said at the Wall Street Journal Live technology conference of plans for the iPhone, iPod, Apple Pay and a possible partnership with Alibaba.
Despite Alibaba being larger than Amazon and eBay combined, Chen pointed out that the Chinese e-commerce giant has only few convenience stores and automated sales machine that takes payment for the e-retailer founded by former teacher Jack Ma. Another expert backed Chen's observation that offline seller and POS machines not accepting Alipay limits its use in China.
However, figures cited by Techcrunch indicates otherwise. It reported that 800 million customers use Alipay service which has a 70 percent market share of online transactions in China. Ma also claimed that Alipay is the third-largest payment system globally, after Visa and Mastercard.
Chen believes that Cook is just leveraging for a better deal with UnionPay, which is why the Apple CEO floated the idea of entering into an agreement with Alibaba to pressure UnionPay to speed up its decision on a temporary deal wherein owners of iPhone 6 devices could link their smartphones to UnionPay's cards.
The conference happened on Oct. 27. It remains to be seen if Ma would be wary of doing further business with the maker of the iPhone 6 after Cook admitted on Oct. 29 that he is gay or if UnionPay would also take Cook's outing into consideration.
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