Alipay and Apple Pay Could Offer Instant, Cheap International Transfers

Last week, the internet buzzed over Alibaba founder Jack Ma’s statement that his company’s Alipay could be integrated with Apple Pay. At a conference, Ma said “I respect Apple and I respect Tim very very much, from the heart. I hope we can do something together,” referring to Apple’s CEO Tim Cook, who unveiled Apple Pay this year.

A connection between the two services is much easier now that the Chinese government has encouraged more competition for its payment transaction business. The national monopoly, UnionPay, has taken a hit after the Chinese government said it would open up more to Visa, MasterCard, and other foreign payment processors.

At the moment, all bank card transactions are cleared by UnionPay, but the government announced late in October that it would meet with foreign firms and allow them to set up their own clearance businesses

The significance of this shift goes beyond Visa and MasterCard. By allowing foreign competition, the Chinese government is also making it possible for foreign companies to create private links between their payment systems and Chinese ones. This means that the regulatory barriers for creating a direct connection between Alipay and Apple Pay is disappearing.

The long-term impact of this change will benefit Americans and Chinese alike. Being fully digital, Alipay and Apple Pay could allow American consumers to buy products from Chinese producers online, and use Apple Pay to checkout. No need to set up any Chinese accounts, or worry about delays in international transfers. It could also allow people to transfer money from Chinese to American accounts (and vice versa) instantaneously, and at little extra cost.

None of this has happened yet, but Jack Ma is obviously eager to get the ball rolling. And with Apple becoming more and more dependent on Chinese consumers for growth, it’s easy to imagine Tim Cook signing up for a partnership very soon.