Apple’s (NASDAQ:AAPL) iTunes App Store has rolled out a major upgrade this morning in China, and now, for the first time, it actually accepts payments in the local currency, the renminbi (RMB). As part of the new RMB payment system, the China iTunes Store now accepts local bank cards - from over a dozen major Chinese banks - but not third-party payment platforms such as Alibaba’s Alipay, Union Pay, or the American Paypal.
In the past, Apple required a credit card that was able to process US dollar transactions, which left out many iPhone and iPad owners in China, who were theoretically then just able to download free apps by making a store account.
The new bank card system that Apple has implemented allows users to ‘top-up’ their iTunes balance with preset amounts, in increments of 50, 100, 300, and 500 RMB (pictured right). This will be familiar to many people here as the way they charge up bus cards, or their mobile phone credit.
Tackling Piracy and ‘Black Cards’
The move is also designed to combat piracy of iOS apps in China, which has been thriving under the previous inconveniences/restrictions. Just this week we saw a major Chinese web company, Tencent (HKG:0700), launch a shanzhai iTunes app that helps you avoid Apple’s tightly-controlled ecosystem, and there’s the Chinese-made iTools desktop app that assists in the jailbreaking and adding of pirated/cracked apps.
In addition, Apple has been fighting the ongoing problem of iTunes ‘black cards’ circulating on the internet, which use hacked credit card accounts to give buyers dollars worth of credit on a temporary iTunes account for a mere few RMB. The fraudulent practice got so out of hand earlier this year, that e-commerce site Taobao blocked searches for “iTunes” and “app store” so as to suffocate the black card vendors.
A lot of grey-import iPhones and iPads (unlocked devices imported from nearby countries) are jailbroken by the seller, almost as a courtesy; it’s a practice that has escalated over time. Of course, a jailbroken iOS device can still buy apps in the legitimate way, and Apple will surely hope that this new, very localized payment solution will be helpful in that.
In contrast, poor old Google (NASQAQ:GOOG) is having a tougher time getting paid apps support for Android implemented in China - perhaps because of regulatory blocks by a government that perceptibly dislikes the American search engine.