Apple Pay's First Day: We Tried It at 37 Stores

At most stores, customers ended up training the staff, a job Apple and UnionPay had left undone.

Even if you don't follow the news, it has been hard to escape Apple Pay these past few days. Bank of China, China Merchants Bank, CITIC, China Guangfa Bank, Shanghai Pudong Development Bank: one after another, the big state-owned and joint-stock banks have announced Apple's payment system, Apple Pay, through their WeChat accounts and apps.

Dianping, Meituan, Maoyan, Trip.com Group, Air China, Vipshop and other dining, travel and shopping apps also rushed out updates in the early hours of today to say they now support Apple Pay.

Apple itself pushed a notice about the launch to tens of millions of iPhone 6 and 6s users. So many people tried it at once that Apple's servers struggled all day; from the morning on, large numbers of users reported that they could not add cards.

Apple has caught the attention of tens of millions of users. But is Apple Pay actually any good?

We visited 37 merchants in Beijing and Shanghai to test Apple's newest way to pay.

Apple Pay is simple to use

In China, Apple Pay has two sets of requirements, one for hardware and one for bank accounts:

• The phone must be an iPhone 6 or 6s running iOS 9.2.
• An iPhone 5s has no built-in NFC, but in our tests it could complete payments through an Apple Watch.
• An iPad with a fingerprint sensor also works, but only for online payments.

On the banking side, only UnionPay credit and debit cards are supported. Dual-brand cards issued by UnionPay with global networks such as VISA, Mastercard or Amex are fine, but you cannot add the single-brand VISA or Mastercard cards that banks such as China Merchants Bank and China Construction Bank issue for spending abroad.

The banks supported so far are Agricultural Bank of China, Bank of China, Bank of Shanghai, CITIC Bank, China Construction Bank, China Guangfa Bank, China Merchants Bank, China Minsheng Bank, Industrial and Commercial Bank of China, Industrial Bank, Postal Savings Bank of China and Shanghai Pudong Development Bank.

The next batch includes Bank of Beijing, Bank of Communications, Bank of Guangzhou, Bank of Ningbo, China Everbright Bank, Huaxia Bank and Ping An Bank.

Apple is switching on Apple Pay for Chinese users in batches. Open the Wallet app and you will see a new prompt at the top for adding a card. If you already use a bank card to buy things in the App Store, Apple will offer to enable that card directly.

Technically, adding a card is very simple: scan your credit card, then enter the verification code and the expiry month and year.

But perhaps because crowds of eager early users overwhelmed Apple's servers today, adding a card often failed from the morning on. Bank customer service could do nothing about it.

Paying with Apple Pay is much simpler than with Alipay or WeChat. Even with the screen off, pressing the Home button twice brings up your default card (you can switch between cards).

Then rest your finger on the Home button. The phone reads your fingerprint and gets ready to pay, and touching its back to any card reader that supports UnionPay's QuickPass contactless technology completes the payment.

The hardware is mostly ready, but few staff know how to use it

Apple's website lists the merchants and apps that already accept Apple Pay or will soon.

These are in fact only a small fraction of merchants. In theory, any merchant whose POS terminal supports QuickPass can accept Apple Pay, whether or not it is an Apple partner.

According to figures Apple gave QDaily, millions of merchants in China already support Apple Pay technically.

But ordinary shoppers do not go to Apple's website to check which stores take Apple Pay, and they will not stand at the till working out how to pay with the cashier while a line builds behind them.

Besides, most people do not know Apple Pay well themselves. So the staff need to know it.

On our store visits, beyond whether the payment went through, we watched for two things: did the staff know how to handle Apple Pay? And if not, did they know QuickPass?

The 37 merchants we tested included coffee shops, convenience stores, supermarkets, fast-food restaurants and other places people spend money often. Some are official Apple partners; some are not yet.

Half of the stores could take Apple Pay in the end. But at fewer than a quarter of them had the staff even heard of Apple Pay. Coffee shops did best.

Staff at Starbucks and Pacific Coffee were ready for Apple Pay. They had already been trained in store on QuickPass POS terminals, so the question did not throw them.

"We've already had the email," said a staff member at Pacific Coffee's Beijing New World branch, who had served three customers trying Apple Pay that morning alone. "But one customer asked about some bank's free Apple Pay offer, and we can't do that. We never got an email about it."

At Starbucks' Meichen branch in Shanghai, our attempt failed. The staff told us several people had already come in to pay with Apple Pay, but only one had succeeded. Even with our volunteer holding the phone right against it, the QuickPass terminal did not recognize it. In the end our volunteer paid with a bank card that supports QuickPass.

At Costa Coffee, the staff member had not heard of Apple Pay, but told us QuickPass was coming to the store soon. "Two stores in the city are piloting it (QuickPass). We don't have it yet," he said.

In theory, anywhere that takes QuickPass should take Apple Pay. But staff like the one at Costa, who knew QuickPass but not Apple Pay, were what we met most often in today's tests.

"You need to add a bank card first. The signal in here is bad, so connect to our Wi-Fi first." She was one of the more practiced staff members we met.

She had been trained by email from headquarters. "Actually, people have been coming in to try it on and off for the past month," she told us. "It seems you can only add a card as of today. I don't know how they got theirs added."

"Muji and City Super both have QuickPass POS terminals, but the staff all said it couldn't be used." This report from a keen reader of the QDaily Lab matched what we found on our own visits.

The Walmart in Beijing's CBD has no QuickPass checkout terminals at all, so Apple Pay was out of the question. At a Nongongshang supermarket in Shanghai, the staff knew neither Apple Pay nor UnionPay's mobile payment, but our sharp-eyed tester spotted the QuickPass logo on the POS terminal and paid successfully in the end.

At these fast-food chains, if you tell the staff you want to pay with Apple Pay, or "Apple's payment," they may not follow. But most know UnionPay's QuickPass.

At the Yoshinoya at Jianwai SOHO in Beijing, the cashier, scanner gun in hand, saw our tester reach for a phone and asked straight away: Alipay or WeChat? That was most merchants' first reaction. Before Apple Pay arrived, WeChat and Alipay logos had already spread across the whole country.

Banks like Apple Pay more than WeChat and Alipay

Over the past two years, WeChat Pay and Alipay have promoted themselves mostly through merchants and users. You have rarely seen a bank loudly announce that it has teamed up with WeChat or Alipay.

This time, nearly all of the 17 banks in Apple's first batch have put up some kind of incentive to get users to add their cards.

• Bank of China: 15,000 points for your first Apple Pay payment; 15 yuan cashback on a 100 yuan purchase (once only); every Tuesday, 15 yuan off Starbucks purchases of 60 yuan or more (while stocks last).
• China Construction Bank: every Saturday and Sunday from February 20 to April 24, 2016, pay with a Dragon Card through Apple Pay at any Carrefour in China and get 20 yuan off purchases of 50 yuan or more.
• China Merchants Bank: 99 points. The bank awards just one point per 20 yuan spent, so this equals the points from 1,980 yuan of ordinary card spending.
• Shanghai Pudong Development Bank: 500 MB of mobile data (first 200,000 people); a trip to Apple's headquarters (raffle, 15 winners); double points (2/18 to 6/30); two Stellar Cinemas movie tickets for a special price of 10 yuan (500 offers a day).
• CITIC Bank: 2,000 points; every Saturday at Walmart and Sam's Club, purchases free once you reach set spending levels; free cup-size upgrades at Pacific Coffee; at Vipshop, 30 yuan off 240 yuan or more with the promo code "pay".
• Bank of Shanghai: during the promotion, 1,000 users who add a card will be drawn to win 5,000 MB of mobile data; shoppers at Vipshop can claim a 30 yuan promo-code red envelope, worth 30 yuan off Vipshop orders of 240 yuan or more.
• China Guangfa Bank: half price at designated merchants, 10 yuan cashback, and discounts on top of discounts.

Apple Pay is quite different from WeChat and Alipay

For users, getting out a phone to pay with Apple Pay feels much like paying with WeChat or Alipay. But behind the act of paying, Apple Pay works differently in several ways.

• There is no topping up

Put plainly, Apple Pay is an electronic card wallet. Apple does not hold or settle any funds of its own, and it plays no part in any stage of the deal between buyer and seller.

• Apple does not store transaction information or details

WeChat and Alipay record every transaction you make. Apple does not.

Using a technique called tokenization, Apple turns your bank card information into a string of characters (a token) stored on the phone.

Each time you pay with Apple Pay, the phone generates a new random token and a set of one-time security codes and sends them to the bank. The bank maps them back to your card and sends back an authorization, and the payment goes through. The bank is not cut out.

Wallet keeps your most recent purchase so you can look it up. Nothing else is saved.

For banks, losing transaction data to Alipay and WeChat is a big problem, especially now that Alipay's parent, Ant Group, has launched Huabei, which is, bluntly, a virtual credit card built on Alipay. Working with Apple avoids this problem.

• Apple Pay counts as offline spending, but that does not mean more points

Because it works differently underneath, Apple Pay counts as an offline transaction, while banks treat Alipay and WeChat as online transactions. Many people are pleased about this, assuming offline spending earns more points. The reality is far more complicated.

Banks choose which kinds of spending earn points to attract the customers they want. China Merchants Bank, which led all banks in total credit card spending last year, awards no points for card payments at many offline stores.

Yet it does award points on Alipay quick payments.

So if points matter a lot to you, once you have claimed your Apple Pay sign-up offers, check how each of your credit cards awards points for online and offline merchants.

• With Apple Pay, there is usually no subsidy

Every store we visited accepted Alipay and WeChat Pay. That is the result of more than a year of work by third-party service companies together with Alipay and WeChat Pay.

When staff heard we wanted to use Apple Pay, they usually checked again and again: "You can't get a discount with this. Only WeChat Pay and Alipay have promotions."

Apple has put no subsidy behind Apple Pay itself, and the banks' subsidies are still somewhat weaker than those of WeChat and Alipay, which love to burn cash.

Early users have had their taste; Apple has to try harder

iPhone users are quicker to buy new devices and try new technology. But every step is hard: letting all users know they can now pay with their phones, persuading them to link their phones to their bank cards, and getting them to open Wallet when they walk into a store instead of scanning a QR code with WeChat or Alipay.

Count how many of the Apple apps that came with your phone you have barely opened, and you will see that being able to use something is not the same as using it.

Over the past year, WeChat Pay and Alipay got people to accept paying by phone. They also made people treat paying by phone as almost the same thing as WeChat or Alipay.

The feedback we heard from staff and customers was often: "Isn't Alipay enough? We've never heard of that thing you're talking about."

A merchant that wants to accept Apple Pay may need an unusually strong will and better-than-average technical know-how.

First, you have to find the Apple Pay link near the bottom of Apple's home page, then scroll to the very bottom of the introduction page to reach the instructions for merchants.

If you want the Apple Pay logo, you download a zip file with an English name. Apart from a usage guide, what you get is an EPS file, and not every small shop knows how to print one.

Though we looked hard for the Apple Pay logo, we found only a handful in the main shopping districts of Beijing and Shanghai. Alipay and WeChat Pay QR codes, meanwhile, are everywhere, from big malls to small restaurants at the foot of apartment blocks.

Phil Schiller, Apple's senior vice president of worldwide marketing, said in an interview in Shanghai last month: "For Apple Pay, China is a landmark stop."

It is true that China, compared with the card-loving US market, is a place where mobile payment is far more widespread.

WeChat, Alipay and their third-party service companies spent heavily and won their place in people's lives by replacing small cash payments. For Apple to bring its own payment system into China, winning over merchants will not be easy.

If Apple does not work to keep these users, the iPhone owners who jammed its servers today may take their screenshots, post them to Moments, and then open WeChat or Alipay the next time they buy something.

Today's tests reminded us of a year and a half ago, when WeChat Pay had just opened up in-store payments. In September 2014, we were among the first to try the service at partner stores in Beijing. Today people can use WeChat Pay with their eyes closed, but back then its partners did not seem quick to respond either.

On the first day WeChat opened its in-store payment service, QDaily tried it at three merchants, and not one of them could take it. Staff either said they knew nothing about it, or said it was still being tested and they did not know when it would work.

A year and a half later, Apple and UnionPay seem to stand at the same starting line WeChat Pay stood at then.

Cover image from digitaltrends

(Thanks to Xu Tao, Minchao Wang, Zhenyu Wang, Shaohong Zhou, Qiwen Cui, Junjie Huang, Changcun Zhao, Yiyuan Tang and lab volunteer Jo for their contributions to this article.)