Businesses are unveiling their own electronic payment platforms one after another in this fintech boom. In this climate, more and more companies are even choosing cooperation with traditional business enemies to maintaining reciprocal relationships with business partners.
According to industry sources on July 27, Samsung Electronics fell into a quandary ahead of the official launch of “Samsung Pay,” a mobile electronic payment system featuring fingerprint recognition. Official online malls such as SSG.com and SSGfoodmarket.com, and affiliates like Shinsegae Department Store of the Shinsegae Group, decided not to receive the test versions of Samsung Pay. This decision was made despite the fact that the Shinsegae Group has a historically familiar relationship with the Samsung Group.
The news came out in a recent meeting for Samsung Pay software developers. Such a move is interpreted as Shinsegae Group’s position to focus on exclusively expanding the influence of its own SSG Pay, which was released recently.
KB Kookmin Card recently released the “KB Kookmin Lotte Big Market Card,” which allows settlements in the Lotte Big Market, a warehouse discount store open to memberships. It could be read as a strategy to hold hands with anyone for mutual benefit, even recognizing the presence of the competitor Lotte Card in the industry.
Earlier in May this year, Hyundai Card and E-mart jointly released “Hyundai E-mart e-Card,” allowing for 1.5 percent of total spending to be accumulated as points. The card attracted attention because it is a joint project between Hyundai Motor Group and the Shinsegae Group.
“As fintech competition is more of the economy of scale that needs to increase subscribers at the first stage, a player in the industry can team up with anybody if it is of benefit to itself,” said an insider in the financial industry, adding, “What’s the matter is whether it is fit for the current circumstances. Consequently, existing close or familiar relationships are now meaningless.”
Such a strategy of local companies, however, creates new troubles coupled with the moves of foreign fintech players such as Alipay, Tenpay, and PayPal.
Currently, foreign fintech companies are trying to get a stepping stone into the Korean market by having steady contacts with top-ranking card companies or high ranking payment gateways. With such ceaseless wooing from foreign fintech companies, more and more local financial firms are calculating the pros and cons of the relationship with foreign firms in the mid to long term view. They, however, debate it with themselves internally, out of the fear that the whole local market could be yielded to foreign firms if things go wrong. Hana Bank already started collaboration with Alipay of Alibaba, serving agency services for the Chinese payment system.
“The unions and divisions in the Fintech industry would continue in the manner that yesterday’s enemy becomes today’s friend and vice-versa in the Korean market that provides the best environment to test fintech, including Korean customers who are well used to the advanced information and communications technologies and e-commerce,” said another insider in the industry.