Apple Pay China
The expansion of Apple Pay into China is facing roadblocks from UnionPay and regulatory issues. Reuters

Apple’s incursion into China has run into a couple snags as it looks to bring Apple Pay to the Asian market. The Cupertino, California, company has a number of obstacles to overcome to enter China, including several of the country’s financial institutions: the UnionPay credit card network and China’s central bank.

"Apple is seeking to cooperate with Chinese financial institutions" a People's Bank of China official told Caixin Online. Talks between Apple and UnionPay have reportedly stalled as well, despite code in a beta version of iOS 8.3 referencing the credit and bank card network. But despite the difficulties, central banking officials and regulators haven't stepped in.

Apple Pay, the mobile payment service that uses near-field communication technology launched in the United States in October, a month after the release of the iPhone 6 and 6 Plus. It has since seen steady growth as more financial institutions and retailers have added support for it. Most recently, Apple added an additional 19 banks and credit unions to Apple Pay, bringing the number of active partners to 80. In total, about 750 banks have signed up with Apple to roll out support, Apple CEO Tim Cook said during an earnings call in January.

Apple has since been preparing to expand Apple Pay abroad, particularly in Europe and Asia. But it’s not known exactly when the service will come to China.

In the meantime, Chinese consumers still have a couple of options to choose from for mobile payments, including NFC-enabled phones on China Unicom and China Mobile. Alibaba offers a similar mobile payment service through Alipay, which instead uses QR bar codes to process transactions.

Apple was rumored to be in talks with Alibaba to bring Apple Pay to China. But it’s not known if or when such a product would roll out, especially since UnionPay is the only way for banks and financial institutions to gain access to China’s NFC payment terminal infrastructure.

But that’s only half of the problem. The NFC chips used by Apple may not fully comply with a technical standard called PBOC 3.0. Mobile payments in China can only be processed on chips that meet that standard. In addition, the Chinese government has also requested that Apple open a data center in China to house Apple Pay data of its Chinese customers.