[1mm Financial Talk] Card Companies Taking a Wait-and-See Approach... Apple Pay Expansion May Slow Down

Check the 'Real Benefits' Hyundai Card Will Gain Before Entering
Uncertain If Member Growth Will Lead to Performance Improvement
"The Lock Will Open Someday... No Need to Rush"

Card companies are increasingly concerned about partnering with Apple Pay. This is because they are not confident about the effectiveness of Apple Pay, which Hyundai Card secured first. Given the various fee burdens, there is a sense that they prefer to observe the situation rather than immediately enter and compete in the early stages.

According to the financial sector on the 5th, card companies are not rushing to adopt Apple Pay. They are primarily taking a wait-and-see approach to how much of an advantage Hyundai Card’s early adoption of Apple Pay will bring. A senior official from a major card company said, "Unless you are the first to adopt, the second adoption doesn’t hold much significance," adding, "Since the terminals have not yet been fully distributed and we want to see what tangible benefits Hyundai Card gains, it is not too late to proceed later."

Having already missed the external "first-mover advantage," they are carefully weighing the "practical benefits" of adopting Apple Pay. Recently, Toss’s offline payment terminal and store management solution subsidiary, Toss Place, announced that it will obtain EMV certification, an international standard for near-field communication (NFC) for Apple Pay payments on its terminals, but stores that can accept Apple Pay remain limited. Shinsegae Group affiliates such as E-Mart and Starbucks also have no plans to adopt it for the time being. While the preference for Hyundai Card is rising and the number of members is expected to increase, the actual contribution to performance is uncertain because they must bear the per-transaction fees of Apple Pay.

Even setting aside the fact that Apple has tacitly agreed to maintain Hyundai Card’s exclusive period, there is a view that the partnership process itself cannot proceed quickly due to physical constraints. There are very few Apple personnel in Korea related to Apple Pay partnerships, so even if multiple card companies propose partnerships immediately, it could take a considerable amount of time. It is also known that card companies are considering jointly forming partnerships in the future to reduce various related costs such as fees. After all, from Apple’s perspective, which collects fees, having more partner card companies means increased revenue, so it is judged that the "lock" will inevitably be released at some point.

Some voices also say that the implicit pressure from Samsung Pay is a burden. If many card companies join Apple Pay at a time when Samsung Pay is promoting an online and offline simultaneous expansion strategy in partnership with Naver Pay to compete against Apple Pay, it could hinder the creation of a strong momentum. An industry insider explained, "There are voices that Samsung Pay, which has not charged per-transaction fees so far, is giving silent pressure by implying it may demand additional fees from card companies in the future," adding, "Even if not per-transaction fees, existing partnership fees could be increased, so card companies are unlikely to rashly antagonize Samsung Pay."

[Image source=Yonhap News]