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'Positive' talks underway for Apple Pay partnership with Alibaba's Alipay in China

After officials from both Apple and Alibaba publicly expressed interest in forging a possible mobile payment deal, Alibaba confirmed on Tuesday that it is currently in negotiations to bring Apple Pay to China.



A potential deal between Apple Pay and Alibaba's Alipay would focus exclusively on the Chinese market, where Alibaba is the dominant online retailer, vice chairman Joseph Tsai told The Wall Street Journal. He said that while the company is "positive" about the ongoing talks, details must still be worked out before an agreement can be reached.

While Alibaba is an online powerhouse, the company's Alipay has yet to take off in a meaningful way at retail in China. The system uses QR codes to be scanned, allowing users to complete transactions on their smartphone.

A partnership with Apple Pay could help both companies gain foothold in the market, as Apple has yet to debut its mobile payments service outside of the U.S.

Tsai suggested that an Apple Pay-Alipay deal could use Alibaba to provide back-end services for Apple Pay, and users would pay for transactions with money from their Alipay accounts.

Both Alibaba Chairman Jack Ma and Apple Chief Executive Tim Cook have expressed interest in working together. Tuesday's remarks reveal that those talks have progressed, and that both parties are still hopeful a deal can be reached.

A potential tie-up between Apple and Alibaba could face significant scrutiny from the Chinese government, however. Alipay has already seen its share of road blocks as it attempts to muscle its way into the mobile payment space.

The Chinese mobile payment market is currently dominated by UnionPay, a state-run operation that has NFC payment terminals across the country. Apple Pay in the iPhone 6 and iPhone 6 Plus is based on the same wireless technology, but adds Touch ID fingerprint sensing for added security.