Apple Pay Landing Preparations Progress Smoothly... Card Companies' Open Pay Faces 'Difficulties'

Apple Pay Landing Rumors Stir... Financial Supervisory Service Reviewing Terms
OpenPay Alliance Prepares to Launch, but Delay Also Expected

[Asia Economy Reporter Yu Je-hoon] As Apple’s near-field communication (NFC)-based simple payment service 'Apple Pay' enters the final countdown for its domestic launch, the local payment market shows signs of upheaval. Meanwhile, the domestic card industry's countermeasure, 'Open Pay,' is struggling to gain momentum.

Financial Supervisory Service Begins Reviewing Apple Pay Terms... Launch Imminent

According to the financial sector on the 30th, the Financial Supervisory Service (FSS) has been reviewing the financial service terms related to Hyundai Card’s introduction of Apple Pay since late this month. An FSS official stated, "We understand that the Financial Product Review and Analysis Bureau is currently reviewing the terms related to Apple Pay," adding, "Since the review usually takes about one to two months, more time will be physically required."

Initially, various online communities speculated that Hyundai Card would launch the Apple Pay service on the 30th in collaboration with Apple. This speculation arose after an image presumed to be Hyundai Card’s new terms was leaked online last month. The image specified the Apple Pay service start date as the 30th. Additionally, the distribution and update of NFC payment terminals at various medium and large merchants supported this speculation. However, Hyundai Card, the party involved, has maintained its previous stance, saying, "We currently cannot confirm any details."

The industry views the domestic arrival of Apple Pay as entering the final countdown, regardless of the exact launch date. Once Apple Pay starts service domestically, the simple payment market is likely to split into three: Samsung Pay based on magnetic secure transmission (MST) and NFC technology, big tech simple payments like Naver and Kakao Pay based on QR and barcode payments, and Apple Pay. Considering that iPhone’s market share in the domestic mobile phone market is around 20-25%, with a significant portion estimated to be from the MZ generation (Millennials + Generation Z), it is analyzed that Apple Pay will have considerable competitiveness.

However, the sluggish NFC terminal penetration rate is the biggest constraint on Apple Pay’s activation. According to the card industry, among approximately 3 million card merchants nationwide, less than 10% support NFC payments. Considering that Samsung Pay quickly settled in the market due to compatibility with existing POS (point of sale) devices, this is a painful point for Apple Pay.

A representative from a mid-sized card company said, "For example, the most urgent thing for Apple Pay to achieve universality is public transportation, but the time and cost required to replace terminals in subway stations and buses scattered nationwide will not be trivial," adding, "Since the existing payment network has been built over 30 years, NFC and various payment systems are expected to coexist for the time being."

Open Pay Struggles Continue... Preparing for a 'Start with Doors Open'

As competition among big tech simple payment services intensifies, the card companies’ countermeasure, Open Pay, is preparing for a 'start with doors open' but has yet to gain speed. The Open Pay coalition includes six companies: Shinhan, KB Kookmin, Lotte, Hana, Woori, NH Nonghyup, and BC Card.

Open Pay is a system that allows cards from other companies to be used on individual card companies’ payment platforms. For example, paying with a KB Kookmin Card through the Shinhan PLAY application. While it still uses existing systems such as MST, NFC, barcode, or QR payments, the fact that services from other card companies can be used through each company’s individual payment platform means overcoming a handicap that card companies previously had.

However, the lack of speed is holding it back. According to the industry, only Shinhan, KB Kookmin, and Hana Card are currently preparing Open Pay at a level that could launch the service within this year. NH Nonghyup, BC Card, and Woori Card, which joined late, are aiming to launch the service next year or in the first half of next year. Although some leading companies are preparing for a 'start with doors open' within this year, there are expectations that the launch could be postponed again.

A card industry official said, "Unlike existing simple payment systems where only the service company and each card company need to be connected, Open Pay is a system among card companies, so the number of cases is significantly higher," adding, "There are many points to consider during system construction, and since each card company is at a different stage, the speed is slow."

Above all, the absence of top-tier card companies Samsung and Hyundai Card, making it a 'half measure,' is a regrettable point for the Open Pay coalition. According to the Credit Finance Association, Samsung and Hyundai Card’s cumulative market share for the third quarter of this year is about 38%. An industry insider said, "Open Pay was promoted to enhance the competitiveness of all players in the payment market regardless of the advantages or disadvantages of specific card companies," adding, "We will strive for a quick launch."