The launch ofApple PayApple’s mobile payment service, South Korea would be imminent. The Financial Supervisory Service, the financial regulator in South Korea, revealed to TechCrunchon November 23, that the launch clause was being examined. It’s a new market riddled with obstacles that is opening up to Apple.
A partnership with Hyundai Card
This is Hyundai Carda subsidiary of the Hyundai Motor Group, which is to introduce Apple Pay to the South Korean market. Apple would have signed a one-year exclusive contract with the Seoul-based financial firm. In other words, in its first year of launch in South Korea, the only people who will be able to use Apple Pay will be those in possession of a Hyundai Card.
TechCrunch reports that rumors about the launch of Apple Pay in South Korea started last month, when an iPhone user posted what appeared to be the terms of service in the country. These indicated that they would enter into force on 30 November next. The Korean media Yonhap Infomax points out that Seoul’s endorsement could take a month or twoand end at the end of November.
Many challenges await Apple
South Korea is the birthplace of one of the largest manufacturers of Android devices in the world, Samsung. However, according to data from StatcounterApple would own 31.8% mobile market share in the country. Additionally, South Korea is one of the most digitally-enabled countries. According to information from Statisticsin 2019, only 17.4% of transactions were made in cash on the territory. Another reason for Apple to conquer South Korean consumers.
However, the Cupertino giant will have to face to strong competition. digital payment systems are already widely adopted in South Korea with services such as Naver Pay, Kakao Pay and Samsung Pay. In addition, another barrier stands in front of Apple: that of technology.
Apple uses with Apple Pay the protocol “Near Field Communication (NFC)”for contactless payments, while the majority of Korean businesses use secure magnetic transmission (MST). The two technologies are similar, but they are not interoperable. Also, only 10% of the 2.9 million South Korean stores can use cards using an NFC protocol, drastically reducing the usefulness of Apple Pay in the territory.
To succeed in this already highly competitive market, Apple will have to be strategic. One of the solutions for the Californian company would be change the protocol used by Apple Pay in South Korea to make it easier to use and reach more potential customers.