China is spelling out the rules for foreign payment companies to enter its massive market, finally giving companies like PayPal and Visa a potential route in.  

Any overseas firm that wants to apply for a licence must establish local operations and have a secure payment system. The central bank says all client data collected in China should be stored and processed in domestic servers.  

It’s a major step by China, which has promised to open the industry up after the World Trade Organization ruled it was discriminating against foreign players in 2012.

But progress has been slow over the years. PayPal has waited for a long time for approval to process domestic transactions. Currently, Chinese users can only use the service via Baidu Wallet to make online purchases outside China.

Visa and MasterCard also lobbied hard for the right to set up their own operations without the need to partner with local firms. But while the fight dragged on, the battleground expanded from credit cards to smartphones.  

More than 65% of China’s population are already using mobile payments. In 2016, Apple Pay became the first big foreign player to offer electronic payment in China. But it has been struggling to gain ground. Right now, nine out of 10 Chinese shoppers making mobile payments use either Alibaba’s Alipay or Tencent services like WeChat Pay.

Apple Pay lags far behind Alipay and WeChat Pay in China. (Source: South China Morning Post)

Unlike PayPal or Visa, Apple Pay’s failure has more to do with its technology rather than regulatory bureaucracy.

Apple Pay is based on NFC technology that only works in stores with expensive terminals. But Alipay and WeChat Pay use QR codes -- all buyers and sellers need to do is to scan a simple code with their smartphone cameras.

QR code payments are so common that Apple now accepts rival service Alipay in both its physical and online stores.