Apple’s ambitious mobile payment service Apple Pay may need some time to see any success in the growing local mobile payment market due to iPhone’s low penetration rate, the difficulty of building partnership with local firms and security issues. Meanwhile, Kakao, which recently launched its new Kakao Pay is expected to reign for the time being, according to market watchers.
Last Tuesday, Apple unveiled Apple Pay, which lets iPhone 6 users pay in stores by holding their phones up to checkout readers.
Though the launch date of Apple Pay in the domestic market is not yet certain, it will be inevitable for Kakao to compete with the global service once it reaches Korea. Apple Pay is much simpler than Kakao Pay as it does not require any complicated security procedures such as authentication certificates, which bother local users.
Still, industry watchers said it would not be easy for Apple’s mobile payment services to see much success in the domestic market.
For starters, Apple’s iPhone series have low penetrate rates ― less than 6 percent ― in the market dominated by local Android smartphone providers such as Samsung Electronics and LG Electronics.
Also, the company would have to build partnerships with relevant financial and IT firms from scratch.
“Building partnerships with individual local banks, credit card companies and telecom operators was not an easy job even for the local company, Kakao,” an industry source said.
The service should also comply with the nation’s security procedures. In order to provide services to local users, the company must first be registered as an electronic financial business operator and go through deliberation with local regulators.
In the meanwhile, Kakao is expected to enjoy the first-mover advantage for the time being, according to industry sources. The company launched Kakao Pay ― allowing users to store their credit card information on smartphones and pay for goods online ― in early September.
Kakao will also unveil its Bank Wallet Kakao service soon, which will allow users to transfer small sums of money through their Kakao-linked bank account. They can send up to 500,000 won ($480) a day.
The company has already partnered with 14 commercial banks and nine card companies to provide mobile payment services to its 37 million local users.
South Korea’s mobile payment market seen a rapid rise in recent years. The number of smartphone users who use smart wallet apps increased to 11 million in May from 4 million in the same month of 2012, according to KT Economic Research Institute.
By Shin Ji-hye (
shinjh@heraldcorp.com)
