×

Apple Pay will officially launch in China next year

Apple and China UnionPay have announced a partnership to officially bring Apple Pay to China by early 2016, underscoring the latest battle for customers in the world's second-largest economy.

The partnership will allow China UnionPay cardholders to add their bank cards to Apple Pay on the iPhone, the Apple Watch and the iPad. China UnionPay has issued a total of 5 million cards in China and abroad. These cards can be used at more than 26 million merchants and 1.9 million ATMs.

The mobile payment system is still undergoing regulatory tests by Chinese authorities, to verify that it is in compliance with the "applicable national mobile payment and financial industry standards in China," Apple said in a statement.

Apple Pay has reportedly seen double-digit growth in U.S. transactions each month, and was launched in the U.K. in the summer with over 250,000 locations accepting the payment system and major banks.

Still, luring customers in China won't necessarily be easy. The new entrant faces steep competition from Alipay, the dominant mobile payments system in China by Alibaba Group, with reportedly over 400 million registered users as of June. Apple Pay also has PayPal to contend with.

Apple Pay's payment process is simple enough. In stores, Apple Pay users just need to hold their iPhones close to the China UnionPay QuickPass-enabled sale terminals, with their fingers on the Touch ID button to pay. Apple Watch users need to double click on the side button with the watch face-up to the contactless reader.

"Apple Pay transforms everyday shopping and our China users will love the incredibly convenient and secure way to pay," said Eddy Cue, Apple's senior vice president of Internet Software and Services, in a statement.

"We're thrilled to be working with 15 of the leading banks in China who have signed on to support Apple Pay" which include Agricultural Bank of China, Bank of China, Bank of Guangzhou, and Bank of Shanghai among others, added Cue.

China UnionPay's own contactless payment system QuickPass and Apple Pay, will together protect customer payment information with payment tokenization technology.

Actual card numbers will not be stored on the device or on Apple servers, but a device account number will be assigned, encrypted and stored on the Apple device. Each transaction will also have be to authorized with a one-time security code, according to the Apple statement.

"China UnionPay is dedicated to promoting payment innovations and providing secure, convenient mobile payment experiences for its hundreds of millions of cardholders, aligning multiple parties in the industry," said Chai Hongfeng, executive vice president of China UnionPay.

Apple Pay has also recently partnered with American Express, who said it would bring Apple Pay to its cardmembers in key global markets, and is already available for American Express cardholders in Canada and Australia.

Follow CNBC International on Twitter and Facebook.