By Cho Jin-seo
Staff Reporter

Telecom operator KTF and credit card giant Shinhan Card have established a joint venture to launch a mobile phone payment system in the second half of the year.

The two firms announced Monday that they will invest 1 billion won each to establish the joint venture, tentatively named Mobile Credit. Shinhan will have 50 percent plus one shares, and will appoint the chief executive officer. KTF will pay the rest, and appoint the chief financial officer.

Korean mobile firms had launched various mobile payment systems in the past, which used either infrared beams or short-distance radio waves. But none was very successful, due to cumbersome devices and different technological standards between companies.

Shinhan and KTF say they will be different. The joint venture will be the first step of the two firms' efforts to seek hybrid business models of finance and telecommunications, they said. They also want to develop the partnership by holding a regular meeting of executives on a finance and telecom cooperation committee.

``Cooperation with Shinhan Card, the largest credit card company in Asia, is a convergence business that can offer what the customers need most,'' Cho Young-chu, president and CEO of KTF, said in a statement. ``It is also an occasion that can change the financial lifestyle of customers.''

Mobile Credit will issue its subscribers a credit card and a USIM (universal subscriber identify module) chip. They can make payment at shops and restaurants either with the credit card or with a USIM-inserted mobile phone. The payment is deducted from the Shinhan credit card account.

``We will stop issuing the plastic card once the USIM readers are widespread,'' said Jung Woon-gyu, leader of the project.

Shinhan Card is the largest credit card company in Korea, fully owned by Shinhan Financial Group. It boasts more than 13.3 million customers and 2.1 million member shops.

KTF is the second largest mobile service operators in Korea after SK Telecom. It is one of leading developers of mobile payment systems in Asia.

The company is also the leader of the third-generation telecom service in Korea, which uses the USIM chip. More than 4.8 million are using KTF's third-generation service.

indizio@koreatimes.co.kr

Lee Jae-woo, left, chief executive of Shinhan Card, and Cho Young-chu, chief executive of KTF, pose for a photo after signing a contract to set up a 2 billion won joint venture. They will market the mobile phone payment system, which will be linked to Shinhan's credit card accounts. / Courtesy of KTF