Samsung, Shinsegae in conflict over mobile payment service

By Yoon Ja-young

Samsung Group and Shinsegae Group, the country’s leading conglomerates coming from the same root, are in conflict over mobile payment services.

Some Samsung Group subsidiaries, including Hotel Shilla, Shilla Stay, Shilla Duty Free and Everland, stopped accepting gift certificates issued by retail giant Shinsegae from early this month as they failed to renew the contract.

Market watchers speculate that this is Samsung’s response to Shinsegae, which does not accept Samsung Pay.

The electronic wallet service developed by the world’s top smartphone manufacturer is expanding, but all Shinesegae Group subsidiaries, including retail outlet E-Mart, Shinsegae Department Store, Starbucks and Chosun Hotel, do not accept it.

“Samsung Pay can be used in most places that accept credit cards or check cards, except for Shinsegae subsidiaries, gas stations, and Korail,” Samsung Pay says on its website.

Shinsegae Group said it was not accepting Samsung Pay because negotiations were still going on.

“We are still talking with Samsung Group...we haven’t come to conclusion yet,” said a spokesperson for Shinsegae.

Other retail giants like Lotte Group and Hyundai Department Store Group accept Samsung Pay.

It also seems unusual when considering that the two conglomerates come from the same family.

Lee Jae-yong, Samsung Electronics' vice chairman and heir apparent of Samsung Group, and Shinsegae Group Vice Chairman Chung Yong-jin are cousins. Lee’s father, Samsung Group chief Lee Kun-hee, is an elder brother of Shinsegae Group Chairwoman Lee Myung-hee, who is Chung’s mother.

However, the two juniors of the conglomerates have clashed because they are both eyeing mobile payment services for growth.

The junior Lee led the launch of Samsung Pay here last August. Samsung plans to expand the service to China and Europe within this month.

Chung is concentrating on expanding to online and mobile services. SSG Pay is at the core of Shinsegae’s blueprint.

According to Shinsegae, SSG Pay is accepted at around 3,000 Shinsgae shops, ranging from the department store to retail outlet E-Mart, as well as Starbucks and convenience store chain Withme.

“We plan to expand franchises that accept SSG Pay,” the spokesperson added. About 1.4 million have downloaded SSG Pay.

However, some analysts say it will be a hard game for Shinsegae because Samsung Pay has much wider use as well as being installed on Samsung handsets as a default.

Market watchers also note that the owner families of Samsung Group and Shinsegae Group have been alienated since 2012, when late CJ Group honorary chairman Lee Maeng-hee sued his younger brother, Samsung Group chief Lee Kun-hee, over inheritances from their late father, Samsung Group founder Lee Byung-chull.

Shinsegae Chairwoman Lee Myung-hee officially took a neutral position in the conflict between her brothers, but it was regarded as a supportive gesture for Lee Maeng-hee.