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Stripe, which powers Apple Pay, has announced Atlas, a service to allows businesses in any country establish a U.S. company with a U.S. bank account and begin using Stripe services. Getty Images/Peter Macdiarmid

Apple Pay is reportedly coming to China in early 2016 with the support of China's four main banks. The banks will help to significantly boost the number of people who can use the payment service in what is the world's biggest smartphone market.

The news comes from sources in China speaking to the Wall Street Journal who claim Apple has already secured deals with the top four state-run banks in the country but that other regulatory hurdles need to be cleared before Apple can launch the service, which it is hoping to do before the major Chinese Spring Festival, which kicks off Feb. 8.

The problems Apple could face are down to the amount of money it is looking to charge for its services. While Apple doesn't officially reveal how much it charges to process the payments, reports suggest it takes 0.15 percent of credit card transactions and a flat 0.5 percent of debit card transactions.

Apple launched Apple Pay just over 12 months ago and it can be used to pay for services with the latest two generations of the iPhone as well as the Apple Watch. China is the world's biggest smartphone market and has been a huge source of success for Apple in recent years as the launch of the larger-screen iPhone 6 Plus combined with a deal with China Mobile -- the world's biggest mobile phone network. The country is now the second biggest market for the iPhone -- rising 99 percent year-on-year in the latest quarter.

Apple will face stiff competition in the country, however, with state-run UnionPay holding a monopoly on credit and debit card processing while Alibaba's Alipay and Tencent's WeChat dominate the mobile payments sector. There was some speculation that Apple was talking to Alibaba about a partnership, but that seems to have come to nothing.

Apple will also face competition from Samsung, which is planning to launch its Samsung Pay in China in the first quarter of 2016. Samsung Pay works in a similar fashion to Apple Pay but has the added benefit of being able to generate a magnetic field to simulate a magnetic-card swipe meaning it can be used at many more locations.

In June Apple signaled its intent to launch Apple Pay in China by registering a company called Apple Technology Service (Shanghai) Ltd. in the Shanghai free-zone to run the payments service in the country and which has reportedly been seeded with $13.5 million in capital.

Tim Cook, Apple's CEO, spoke about his desire to launch the service in China in April during a visit to the country. Cook said he “very much wants to get Apple Pay in China,” adding that he was "very bullish on Apple Pay in China.”

Apple Pay recently became available in the U.K., Australia and Canada, as the company looks to expand its user base.