Patent wars spread to credit card industry

By Kim Jae-won

Patent wars will spread to the local credit card industry as plastic issuers rush to put their own technologies in place to brace for the so-called mobile wallet era when consumers can buy goods and services with their cell phones, industry sources said Thursday.

The technology competition draws more attention as the nation’s two biggest telecommunications companies ― KT and SK Telecom ― lead the war through their credit card affiliates ― BC Card and Hana-SK Card, respectively. KT has a controlling stake in BC, while Hana-SK Card is a joint venture between SK and Hana Financial Group.

Hana-SK triggered the competition by securing a patent which enables customers to apply for loans via their mobile phones as the technology acknowledges the user automatically without having to enter their card number. Experts say Hana-SK has the initiative in this field with the patent, essential technology in the industry, which its rivals cannot help but use but must pay royalties.

It has the most mobile card customers at about 400,000 and plans to launch a smartphone application in the near future which will let customers apply for a credit card from their smartphones.

“The plastic card is gone, now it’s time for mobile cards. We will dominate the credit card industry with our various specialized services and patents in this sector,” said a Hana-SK spokesman.

BC, however, says that it will not sit back and is ready to catch up. It also has an information technology patent that provides mobile receipts and bills as well as advertisements, information, coupons and gift certificates through customers’ mobile phone based on their consumption pattern.

Experts say that the two companies may clash over patents from time to time and the trend will increase in three or four years when mobile cards will replace plastic ones.

Other players, such as Shinhan, Samsung, KB Kookmin and Lotte, are also gearing up to enforce their information technology departments to narrow the technology gap with the two frontrunners.

Shinhan, the No. 1 player, has added more information technology specialists to its mobile card development team. Samsung recently secured a patent for a mobile card issuance and transaction system related to discount points.