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Samsung Pay (Samsung Electronics) |
Samsung Electronics announced Wednesday that it will not charge any fees to card issuers in Korea for its digital wallet service, Samsung Pay.
"We have decided to keep Samsung Pay commission-free," a Samsung official said in a statement. “Samsung Electronics is dedicated to enhancing the development of the domestic payment ecosystem by maintaining ongoing partnerships with local card companies, all while delivering the finest Samsung Pay service to consumers.”
Samsung has said it will soon sign a new contract with card companies, but has refrained from disclosing details regarding the duration or terms of the new agreement.
Local credit card issuers welcomed Samsung’s decision.
“We are relieved. There was a concern that it could lead to a snowball effect, with other payment companies like Naver Pay and Kakao Pay also considering implementing fees,” a credit card industry official said on condition of anonymity.
Credit card industry sources estimated that if Samsung Pay were to become a paid service and apply a similar level of fees as Apple Pay, they would have to bear an additional annual commission fee ranging from 70 billion to 100 billion won ($55 million-$79 million) in total.
There were also public concerns that such a change could eventually burden consumers.
Regarding whether Samsung's decision would influence Apple Pay to lower or eliminate its commission fee in Korea, many industry insiders saw it as unlikely.
“Apple had not entered the Korean market for nearly a decade, and it was Hyundai Card that brought the service here, offering to pay them a fee. Given this context, it is unlikely that Apple will relinquish its commission fee,” said another industry insider, who wished to remain anonymous.
Speculation about potential fees for Samsung Pay started in March, coinciding with the launch of Apple Pay in the Korean market.
Apple, along with its exclusive local partner Hyundai Card, did not disclose specific fee details. However, industry insiders estimate that Apple charges a commission fee of around 0.15 percent on credit transactions.
Sources speculated that Samsung might adopt a similar approach and begin collecting commission fees after observing Apple Pay's strategy in Korea.
In May, the rumor about commission fees reignited as Samsung decided not to renew its existing contract with local card companies for its mobile payment service.
Since the initial launch of Samsung’s digital wallet service in Korea in August 2015, there have been no changes to the commission-free structure as outlined in the contract.
At the time, a Samsung official said that various details in the contract, including fee collection, would be subject to discussion with local credit card issuers.
Samsung Pay is the country’s top offline mobile payment provider with a market share of 23.5 percent in the first half of last year in terms of users’ transactions. It also accounted for about 80 percent of all offline digital payment transactions here.
