Apple accepts WeChat Pay in bid to reverse sales decline

Logos of Apple's app store, and Wechat Pay. [Photo/VCG]

Apple Inc announced on Tuesday its iconic app store and music-streaming service Apple Music now accepts WeChat Pay in China, a clear sign of easing tensions with internet giant Tencent Holdings Ltd amid an in-app purchase spat.

Experts said Apple had very few choices but to reconcile with Tencent, a bellwether of the mobile industry and a dominant social media force in China, as it tries to salvage falling sales and retain users in the world's largest consumer market.

In a statement, Apple said it is "excited" to introduce Chinese customers using WeChat Pay to purchase apps or subscribe to Apple Music, and will continue to offer payment options that are simple and convenient.

The inclusion of Tencent-backed WeChat as a payment option fills the void of having China's second-largest mobile wallet on board when 963 million WeChat users become accustomed to making purchases via the all-in-one app.

App store, which houses a number of mobile applications from gaming, entertainment to dining for the iOS system, is a main gateway for the US tech giant to earn fees from iPhone users. It previously supported credit card transactions, its indigenous Apple Pay, China's UnionPay, and Alipay, WeChat Pay's biggest rival.

The Chinese mainland has been a critical battlefield for Apple's app store. As of June, the region generated nearly one-third of the app store's worldwide revenue, according to App Annie, a firm that tracks metrics for apps.

With people awaiting the new iPhone lineups and Chinese brands elbowing into the premium phone market, Apple is in dire need of alternative revenue streams to make up for the sales slump, and that means doubling down on software, said Li Chao, senior analyst at iResearch.

"Apple has nothing to lose to include a familiar payment method to the Chinese. It can even boost sales in the short term," he said.

Li's remarks are backed by numbers. Alipay and WeChat Pay combined a whopping 94 percent of China's 18.8 trillion yuan ($2.85 trillion) mobile payment market in the first quarter of 2017, according to Analysys. Apple Pay, albeit being a hit in Western countries, has less than 1 percent of the market share.

"Despite that, the very last thing it (Apple) should do is to run afoul with Chinese tech players and treat them as competitors," Li said.

Ma Si in Beijing contributed to this story.