Foreign mobile wallet providers including Apple, LG and Samsung face an uphill battle competing for a share of China's payments market given the dominance of the more established local players. 

“The digital wallets of smartphone makers like Apple and LG will face a struggle to displace the first mover advantage enjoyed by Alipay and WeChat Pay, which have gained widespread adoption. Both Alipay and WeChat are well positioned as the mobile wallet starts to displace the physical wallet. However, our research continues to show that security remains a key concern for all mobile payment users,” says Nitesh Patel, director of mobile payment service at Strategy Analytics.

Currently, Alipay and Tenpay – parent company of Wechat wallet – account for a 55.4% and 32.1%, respectively of the mobile payment market in China in the second quarter.

Smartphone users in China are adopting mobile payments more aggressively than users in other countries, analysts say. 

“China clearly sees mobile payments as delivering convenience, speed, and financial benefits over and above cash and card based payments. Notably, AliPay and WeChat are both widely accepted by retailers in China while the penetration of NFC lags behind,” says Alvin Wu, analyst at research firm Strategy Analytics.

About 75% of mobile phone users tap their gadgets to transact in physical stores, the firm adds. 

The convenience, speed of transaction and discounts are the main factors encouraging the use of mobile wallets over traditional payment methods.

China’s payment platforms are continuously expanding their global footprint. Alipay just entered the US market through partnerships with payment processors First Data FDC and Verifone. The latest deal represents its global strategy to reach Chinese consumers traveling abroad.