"Apple Pay-Fueled Fee Competition, Losses May Fall on Consumers"

Apple and Samsung Pay May Become Dependent on Big Tech
Need for Evolution into Comprehensive Platforms Through Collaboration

As Apple Pay, which charges a fee per transaction, lands in South Korea, concerns have been raised that credit card companies' room for maneuver will narrow. With the possibility of Samsung Pay also imposing fees increasing, there are worries that credit card companies may ultimately become dependent on mobile phone operators. Due to fees, credit card companies, inevitably facing profitability deterioration, may have no choice but to reduce benefits returned to consumers.

On the 11th, the Korea Credit Card Association held a spring seminar titled "Restructuring of the Payment Market and Management Strategies of Credit Finance Specialists" at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. Professor Seo Bong-kyo of Dongduk Women's University, who gave the keynote speech, expressed concern, saying, "If Apple Pay and Samsung Pay impose transaction fees, the deterioration of credit card companies' profits is inevitable," adding, "Recently, in the simple payment market, credit card companies' share has been shrinking due to pressure from big tech companies."

Samsung Electronics has so far maintained a group contract with credit card companies that does not separately pay fees related to Samsung Pay, automatically renewing it every year. They have only paid some royalties allowing the use of Samsung Pay's Magnetic Secure Transmission (MST) payment method within each card company's application (app). However, recently Samsung Electronics announced that it will not renew the free usage contract expiring this August. Like Apple Pay, the imposition of fees per transaction has become likely. There are even concerns that big tech companies such as Naver and Kakao, which offer simple payment services, may also demand fees in the future.

Professor Seo emphasized that credit card companies need to evolve beyond simple payment businesses into comprehensive platforms. He analyzed that they should move toward models like Samsung Group's financial affiliate 'Monimo,' which combines life and non-life insurance, pensions, financial technology, and telemedicine.

Professor Seo stressed, "Another approach is to create a collaborative platform among credit card companies that includes various content such as webtoons and web novels, making it a simple payment platform that users want to use."

There was also an opinion that a grand cooperative model among credit card companies is necessary to counter big tech, Apple, and Samsung Pay. It was suggested that services like 'Open Pay,' created jointly by credit card companies, should be further expanded. Although the joint simple payment service 'Open Pay' was launched at the end of last year, only Shinhan, KB Kookmin, and Hana Card participated, and the response has been minimal. Park Ji-hong, a research fellow at Hana Financial Management Research Institute, explained, "It seems that cooperation among credit card companies rarely happens because they think they are doing favors for others," adding, "They need to evolve into a cooperative platform that offers private label credit cards (PLCC) among card companies and intermediates products such as loans, deposits, insurance, and investments."