Apple keeps betting on Asia: the tech behemoth plans to launch Apple Pay in China by February

Apple Inc. is planning to launch its new Apple Pay electronic-payment service in China by early February, says the Wall Street Journal referring to people familiar with the matter. But the U.S. tech giant risks being eaten by local sharks.

Apple's stock was down 1.3% at $117.75 as of 7:59 pm EST on November 23.

The move will bring Apple to a vibrant but highly competitive market for digital money. The tech giant has struck deals recently with China’s big four state-run banks, the WSJ said. The agreements will allow potential Apple Pay users to connect the service to their local bank accounts.

The move could still face regulatory obstacles in China, where banking and e-commerce are monitored by a number of regulators. But the Cali-based behemoth still expects to start its service before China’s Spring Festival holiday on February 8.

It is also unclear how much Apple would charge for purchases carried out through Apple Pay. In the U.S., Apple gets 0.15% of all credit card transactions and 0.5 cents per debit transaction.

The people familiar with the matter said to the WSJ that the amount Apple would make off such transactions has been an impediment in negotiations.

Apple Pay works on the latest iPhone models - the iPhone 6 and iPhone 6S. It is based on near-field communication technology, which allows users to tap their devices on readers at store sales counters and complete purchases by scanning their fingerprints.

The most popular Apple product in China is iPhone. The company’s sales to greater China, which includes Hong Kong and Taiwan, rose 99% to $12.5 billion in the quarter ended September 26.

But obviously, Tim Cook thinks the Chinese will find his e-payment system as enchanting as his phones.

Local sharks

The biggest obstacle is not regulators, however. Apple Pay is trying to enter the market where electronic payments are blooming and which is also dominated by its rivals.

State-run China UnionPay Co. holds a monopoly on credit- and debit-card payment processing, effectively pushing aside MasterCard and Visa. In the private sector, electronic payments are dominated by Alipay, a service run by an affiliate of Alibaba Group Holding, and WeChat, a chat-and-services app run by Tencent Holdings.

Moreover, one of Apple's fiercest rivals Samsung, is set to launch its payment platform in the UK, China and Spain by the first half of 2016, while an imminent LG G Pay app will debut in December.

For comparison, Android Pay and Apple Pay are based on NFC-based technologies while Samsung Pay prefers its magnetic secure transmission (MST) technology. But LG G Pay hasn’t yet decided what it will use. LG, however, is likely to use a highly flexible technology for its payment platform, said Tech Times. The competition will only grow more intense, as polls show people still are reluctant to drop conventional payment methods.

According to a survey from Accenture, 67% of people use cash, 59% of people use debit cards and 50% use credit. Apple Pay usage? 8%. A September survey of 3,000 credit card users by Phoenix Marketing International shows 14% of credit card users adopting Apple Pay.

However, as Samantha Sharf from Forbes noted, it is impossible to ignore the 48 million people who bought iPhones – largely the 6 – in Q4. We can’t know precisely what convinced they to buy but the 1% bump in sales from Q3 presents an opportunity for Apple Pay. So, a success in China is quite likely.