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Payment market war begins
By Anna J. Park
With Apple Pay's imminent launch in Korea, Naver Pay and Samsung Pay formed a strategic partnership earlier this week to consolidate their current dominance over the mobile payment market in the country, a move seen as an alliance to keep Apple Pay's potential growth in local markets in check. It is the first time for Samsung Pay to join hands with financial companies, other than Samsung Card.
The partnership between the two top mobile payment players in each domain ― Naver Pay being the number one online payment service company and Samsung Pay being the top offline mobile payment service with 23.5 percent market share in the country ― is expected to create synergy, resulting in increased convenience for service users.
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| Official logos of Samsung Pay and Naver Pay / Courtesy of Samsung Electronics |
Market watchers see the two firms' partnership as possible because of shared interests in expanding cooperation. Naver Pay plans to enlarge its scope of offline payment, and Samsung Pay aims to counter Apple Pay's entry into the Korean market by raising Samsung Pay's accessibility to a wider range of transactions.
Apple Pay succeeded at earning final authorization from the Financial Services Commission (FSC), the country's top financial regulator, for its business in the Korean market in early February. The global tech giant's mobile payment service used by nearly 500 million people around the world is expected to bring about a major shift in the local mobile payment landscape. Apple Pay, in partnership with Hyundai Card, is expected to kick off its Korean operation as early as next month.
A possible upheaval in the mobile payment service market could lead to a change in the status quo of the local cell phone market share as well. Currently, Samsung smartphones accounts for 58.38 percent of the local market, while Apple represents some 34 percent, as of September last year. As Samsung was already showing signs of losing its share in the local smartphone market last year, Apple's mobile payment service could deliver further blows to Samsung.
On top of the Apple Pay launch, the global tech giant aims to open up two more stores in Seoul, totaling six stores in the city by later this year. Except in the U.S., only a handful of cities, including London, Toronto, Shanghai and Sydney, have more than six Apple stores.
"It is rather evident that Apple Pay's launch in Korea will lead to an increase in the number of iPhone users in the country. Samsung Electronics cannot help but focus on expanding Samsung Pay's versatility by partnering outer services like Naver Pay to secure loyal customers," an industry watcher commented.
It is not only Samsung Pay that has been preparing for shocks from Apple Pay's launch in the country. Several major card companies, including Shinhan, KB Kookmin, Lotte, Hana, Woori and NH NongHyup, have agreed to form a common "open pay" service, through which users of one of the card companies can use other companies' mobile payment platforms. It is a move to broaden their cards' relevance and versatility, in preparation for Apple Pay's entry into local markets.
Hyundai Motor has also decided to enter the payment market. As the automobile company vows to shift towards making software-defined vehicles (SDV), it applied for the trademark for "Hyundai Pay" earlier this month. The auto giant aims to facilitate drivers' payments within Hyundai vehicles.
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