Who will dominate Korea’s mobile payment market?
In this article (5)
South Korean heavyweights ranging from Internet to retail to tech companies are all paying keen attention to preoccupy the mobile payment system market, which hasn’t yet taken off.
Since Daum Kakao first ignited the competition by rolling out its mobile payment Kakao Pay last year with its 4 million subscribers. Korea’s largest portal operator Naver unveiled Naver Pay this July, by joining hands with 50,000 partner stores.
Smartphone conglomerates are no exceptions here. Korea’s largest smartphone maker Samsung Electronics is set to unveil its new mobile payment system Samsung Pay in September. It is expected to be embedded in its latest smartphones like Galaxy S6 and Galaxy S6 Edge. As the tech giant recently acquired Boston startup LoopPay, which has magnetic secure technology, Samsung Pay will be compatible with existing magnetic card readers. This way, stores do not have to change their readers separately to use the service.
In the smartphone market, Samsung has to compete with its global rivals Apple and Google. American search giant Google unveiled Android Pay at its I/O Conference 2015 late in April at San Francisco. Samsung’s arch rival Apple unveiled Apple Pay last October, and is now in discussion with China’s biggest e-commerce company Alibaba in a bid to make forays into the China’s market.
Market watchers say the mobile payment system, which heralds the opening of the Fintech market – a combination of finance and technology – will have a great impact on the local financial market. Commercial banks have so far been in charge of small sum transaction but it is likely to be shifted to non-financial institutions if the mobile payment service takes off.
Daum Kakao’s Kakao Pay, which is the first mobile payment service in Korea, already saw more than 4 million subscribers last month. Though it still does not have a great impact on the market with a limited number of partner stores, analysts say they have secured a meaningful number of clients.
Korea’s financial watchdog said when the number of Kakao Pay’s subscribers reach 2 million, it will have a significant meaning as a financial transaction tool. Currently, no official figure of daily transaction has been unveiled.
“Korea’s financial watchdog said when the number of Kakao Pay’s subscribers reach 2 million, it will have a significant meaning as a financial transaction tool.”
The local mobile payment market is expected to continue to grow, according to market observers. In a nation dubbed as IT powerhouse, many users still find it difficult to buy goods online as they have to install various programs such as Active X and keyboard security programs. Also, they have to type in their credit card information or personal information every time they pay.
However, the emergence of the mobile payment system is removing all the hassles and only requires simple authentications such as smartphone numbers or password.
According to research firm Gartner, the local mobile payment service market came to around 3.8 trillion won in the fourth quarter of last year, up 65 percent during the same period of the previous year. The global mobile payment service market also continued to grow around 30 to 40 percent annually for the past years. It would reach around 721 trillion won by 2017.
“There is not yet a dominant player in the local mobile payment service market. Thus, fierce competition among tech firms hoping to preoccupy the market is expected in the second half of this year,” according to a market observer.
Questions & Answers
Q.Which companies are competing for dominance in the Korean mobile payment market?
Which companies are competing for dominance in the Korean mobile payment market?
Internet companies like Daum Kakao and Naver, retail giants Lotte and Shinsegae, and smartphone maker Samsung Electronics are all introducing their own payment systems.
Q.What is the primary advantage of Samsung Pay over other mobile payment systems?
What is the primary advantage of Samsung Pay over other mobile payment systems?
Samsung Pay will be compatible with existing magnetic card readers because of LoopPay's technology. This means stores will not need to change their equipment to use the service.
Q.How large was the local mobile payment market in Korea at the end of last year?
How large was the local mobile payment market in Korea at the end of last year?
According to research firm Gartner, the local mobile payment service market in Korea was approximately 3.8 trillion won in the fourth quarter of last year.
Q.Why is the mobile payment system expected to grow significantly in Korea?
Why is the mobile payment system expected to grow significantly in Korea?
The system removes the hassle of installing various programs and repeatedly entering credit card details for online purchases, simplifying the payment process for users.
Reader pulse
Who will win Korea's mobile payment race?
17,840 votes so far