By Kim Tong-hyung
Staff Reporter

SK Telecom has moved closer to making the "mobile wallet" a reality, enabling users to pay for public transportation fees and wire money to bank accounts using microchip-inserted mobile phones.

It will team up with the Hana credit card company to add card functions to the phones in October.

Having a handset with the capabilities of a credit card would bring a world of change to wireless users, which SK Telecom hopes will be a license to print money.

Comfort and ease are the main benefits of the mobile wallet. The freedom from coins and paper money is obvious, and since data is stored inside the "smart cards" of the phones, people can use the new gadgets immediately after they are issued and also check information stored inside the devices at any time.

SK Telecom also hopes that the credit card functions of the new phones will finally allow the company to hit the gold trail in mobile data. Despite owning perhaps the most expensive hardware in the world, expensive data rates and lackluster content have discouraged Koreans from using their multifunctional handsets for anything other than voice.

Adding card functions to the devices just might do the trick. It's not hard to imagine a day when wireless users will be able to purchase a pair of shoes an actress is wearing in the television drama they are watching on their phone, simply by tapping the touch screen a few times.

"The blending of communications and financial services is a promising possibility for telecommunications companies looking to achieve synergy through convergence, and the mobile sector is at the forefront of these changes," said Stan Jung, an analyst from Woori Investment and Securities.

SK has more than 24 million customers, who account for more than 50 percent of the market.

Hana decided to spin off its card unit for the joint venture with SK Telecom, tentatively named "Hana Card."

The two firms are in the final phase of talks and are currently debating how much of a stake SK Telecom should have in the new company. A "50 plus one" agreement is likely, industry sources say, with SK Telecom owning 49 percent of the new company and Hana taking the remaining shares to become the majority shareholder.

SK Telecom and Hana officials declined to comment on the deal, but added that they are keeping their options open to partner with another financial service company or mobile-phone operator.

In the market, the deal is regarded as a foregone conclusion.

"The discussions over management rights is a touchy issue for both SK Telecom and Hana, but it seems that both are thinking that this is the best possible deal for them available at this point. They are not far apart in any way."

Hana currently has about 5.5 million credit card customers, which represents only about 3 percent of the market. Partnering with SK Telecom, and tapping the company's 24 million customers, would certainly allow Hana to strengthen its market position.

Shinhan Card, the country's biggest credit card company, controlling more than 40 percent of the market in revenue, has about 14 million customers, while Samsung Card, the industry runner-up, has just over 9 million customers.

SK has some 30 million subscribers for its "OK CashBag" cards, a loyalty cash-back program that enables users to collect points at affiliated shops. A significant number of the OK CashBag cardholders are expected to be integrated into the Hana-SKT Card, analysts predict.

thkim@koreatimes.co.kr