Apple has certainly gone all out to fast track "Apple Pay" into China and has made it crystal clear that it's a top priority. Today the buzz is about the Apple-UnionPay deal that was just announced but for the past several weeks there was a lot of press surrounding a possible deal being hammered out with Alibaba to form a payment system alliance. An alliance with Alibaba would allow Apple Pay and/or at least their one-tap purchase process to work for iPhone customers making purchases with Alibaba that has a massive online market share footprint in China. Today, an interview with Alibaba's Executive Vice Chairman Joseph Tsai has come to light where he sheds a little light about a possible Apple-Alibaba alliance.
The Wall Street Journal spoke with Alibaba Executive Vice Chairman Joseph Tsai at the company's headquarters in Hangzhou last week. Tsai, one of the company's co-founders, talked about Alibaba's discussions with Apple, its strategy for alliances and acquisitions as well as its plans for the U.S. market.
WSJD: Alibaba Executive Chairman Jack Ma said last month he was interested in working with Apple in payments. Tell us more.
Tsai: A lot of specific points are being discussed and worked out. Apple has sold a lot of phones in China. If people want to use Apple Pay in China, Apple would have certain restrictions and limitations on operating payment businesses in China. So we are thinking whether there is any opportunity for us to work together where Apple Pay and Alipay can somehow work together in China. Alipay is part of Ant Financial, so (Ant Financial CEO) Lucy Peng and her business development team are involved in the talks. Right now, I think what we can say is that this is focused on the China market for Apple. We are positive about the potential cooperation, but it depends on the details being worked out.
WSJD: When people use Apple Pay with their iPhones, Alipay could provide back-end services so the money for the payments comes from their Alipay accounts. Is that how it would work?
Tsai: Yes, that's a possibility. That's the obvious possibility.
WSJD: What are the some of the details that need to be worked out between Apple and Alibaba?
Tsai: There's a regulatory component. How can we help Apple on the regulatory side, because Alipay has the license to operate a payment business in China. There's also an operational component. If you are talking about Alipay as the back-end operation to support the front-end Apple Pay, how do the two systems work?
At the end of the day, you are funding the payment transactions from the Alipay account through Apple Pay, so that flow of money has to be very smooth. And there's a lot of technology involved.
For more on the Wall Street Journal's interview with Alibaba's Executive Vice Chairman Joseph Tsai, click here.