An extremely challenging market seems to be the main reason. In a 2016 report published by the China Payment and Clearing Association, an organization for third-party payments, proximity payments made up less than 1% of the overall mobile payment market as compared to remote payments which made up the rest. Samsung Pay's collaboration with UnionPay was based on proximity payments, while Samsung's QR code based tie-up with Alipay is considered a remote payment.
In addition to tapping into a much larger market, Samsung also cares about bringing consumers an improved user-friendly experience. Since Apple Pay only supports UnionPay cards, Samsung wanted to figure out a way to create multiple paying channels beyond just UnionPay like Alipay and probably other wallets in future. This step can bring more customers for Samsung, in both electronic devices and the new payment app.
UnionPay and banks have always seen Samsung and Apple Pay as a lift-raft in the payments storm stirred by the BAT. In third-party payment methods, such as Alipay and WeChat, money goes straight from the card owner to the money receiver. This eliminates the need of going through the UnionPay network and therefore banks and UnionPay receive no fees, and very little data. As a result, Apple Pay and Samsung Pay have helped UnionPay and banks regain customers.
However, as Samsung officially recognizes Alipay, banks found themselves in an embarrassing situation. The banks spent a large amount of money in helping Apple and Samsung to promote their services but are now “betrayed” by their partner. As soon as Alipay and Samsung announced their partnership, the banks and UnionPay nearly immediately responded by raising questions around the security of QR code payments. Another issue banks and UnionPay questioned was if users face fraud, will the customer blame banks since the QR code and bank cards are listed together in Samsung Pay app?
For banks and UnionPay, the promotion of Alipay by Samsung blows away one of their last hopes of retaining customers. In addition to Alipay, WeChat Wallet may also follow up the trend. It is now crucial for banks and UnionPay to come up with something to adapt to the new market environment.