Apple Pay's imminent launch in Korea draws mixed responses

The Korea Times

The Korea Times

Finance

Mon, September 25, 2023 | 09:30

Companies

Apple Pay's imminent launch in Korea draws mixed responses

Posted : 2023-03-19 15:30

Updated : 2023-03-20 14:41

Apple Pay promotional image / Korea Times file

By Lee Yeon-woo

Apple Pay is finally set to land in Korea on Tuesday. Despite the intense anticipation surrounding its launch, the service is expected to face challenges for some time due to a lack of necessary infrastructure and service providers.

According to industry sources, Apple will release its payment service Apple Pay on Tuesday, a month and a half since the Financial Service Commission (FSC) gave permission to launch the service in February.

The service allows Apple users to register their card number on Apple devices, and make payment without carrying plastic cards. Currently, the service is only available to users of Hyundai Card, as other card companies have not yet signed up to participate.

The news has raised the number of debit cards issued from Hyundai Card in February by 162,000, or 7.3 percent, compared to January. The number also marked a whopping 40 percent increase compared to a year ago.

Its arrival has also had a noticeable impact on the stock prices of companies related to the service. For example, Sungwoo, a producer of wireless communication devices, saw a 5.57 percent increase in its stock price to 3,030 won ($ 2.32) on the latest Friday market, while ELUON, which produces a chip for near-field communication (NFC), showed a 5.61 percent increase. Electronic payment service operators such as Korea Information & Communications (KICC) and KG Inicis have also enjoyed an uptrend.

Several major retailers in Korea, including convenience stores and supermarkets such as Lotte Mart, Homeplus, and Costco, have already prepared to adopt the new Apple Pay service. Additionally, some department stores and coffee chains, such as Ediya and Mega Coffee, are reportedly in the process of preparing to adopt the NFC terminals.

However, doubts have been raised about whether the service can hold a threatening influence in the market as expected.

Despite some retailers' participation, the service still faces significant challenges in Korea due to the limited number of stores equipped with NFC terminals. Currently, below ten percent of the credit card member stores in Korea are equipped with the necessary infrastructure, and they are primarily major franchises due to the expense burden.

Shinsegae-affiliated stores' refusal to participate in the service is another negative factor. One of its affiliates, Starbucks Korea, is known to have customer groups overlapping those of Apple Pay ― young adults in their 20s and 30s.

The service is also not yet available for public transportation.

"For the moment, many people will find it hard to use the service due to the current low distribution rate of NFC terminals," said Seo Ji-yong, a business administration professor at Sangmyung University. "The situation could improve depending on how quickly the service can gain market share in the domestic payment service industry."

yanu@koreatimes.co.kr