[1mm Financial Talk] Apple Pay, Is It Really Not Accepted at Shinsegae Department Store and Starbucks?

Shinsegae "Software improvements for Apple Pay not done yet"
Concerns over Apple Pay expansion delay... Some say it's 'unfounded'
Introduction expected after assessing usage decline and data reduction

Opinions are divided ahead of the launch of Apple Inc.'s contactless payment service 'Apple Pay' in the United States. Concerns have arisen that its influence may diminish following news that Shinsegae affiliates such as Emart and Starbucks are not preparing to adopt Apple Pay. However, some predict that this is merely a 'groundless worry' and that the introduction of Apple Pay in various large stores is only a matter of time.

According to industry sources on the 8th, Apple Pay is scheduled to be officially launched in South Korea this month in partnership with Hyundai Card. However, Emart, Starbucks, Shinsegae Department Store, and others have not installed near-field communication (NFC) payment terminals that support Apple Pay, nor have they upgraded their services for payment. To accept Apple Pay via NFC, existing payment terminals must either receive additional certification or be replaced with certified terminals, but such measures have not been implemented. The companies themselves have stated that even if Apple Pay is commercialized, it cannot be used at present. Previously, Shinsegae only formed a partnership about a year after Samsung Pay was launched in 2015.

Because of this, concerns have been raised that the strategy to expand influence centered on large franchise stores may face setbacks. Since only 5-10% of the 2.9 million domestic franchise stores have introduced NFC terminals equipped with the contactless payment method (EMV) essential for Apple Pay usage, targeting major consumer channels first was crucial. Some reactions even suggested that due to Samsung's competition, Apple Pay has lost its 'allies.'

However, there is also a view that such worries are 'groundless.' Major domestic retail companies have already begun preparations for Apple Pay usage. Lotte Shopping, which operates Lotte Mart, Lotte Super, and Max, is focusing on introducing terminals for Apple Pay. Homeplus has also equipped its stores with terminals and updated software to enable Apple Pay usage. Major retail companies such as Lotteria, McDonald's, and Kyobo Bookstore have either installed or are preparing Apple Pay-compatible payment terminals.

The industry believes that Shinsegae affiliates' adoption of Apple Pay is only a matter of time. Since Shinsegae still operates several proprietary 'Pay' services, it is analyzed that they simply need time to 'organize' before introducing Apple Pay. Shinsegae currently operates 'Smile Pay' under Gmarket, a subsidiary of eBay Korea acquired in 2021, and its own 'SSG Pay.' As of the end of last year, the number of users was reported to be approximately 17 million and 9 million, respectively. This surpasses half of Naver Pay's 30 million users, which is the number one in South Korea. Starbucks has maintained a good relationship with Hyundai Card, which is practically the sole introducer of Apple Pay, operating a private label credit card (PLCC) for three years since 2020.

A card industry official explained, "Since Shinsegae's SSG Pay and Smile Pay remain strong, they cannot help but worry about decreased usage rates and customer data loss," adding, "The delay is simply because time is needed to assess the impact of Apple Pay's introduction and to set future strategies, but the adoption itself is considered a foregone conclusion."