In a Dilemma
According to industry sources, Samsung Pay is rapidly increasing its presence in the domestic online payment market by absorbing credit card companies’ electronic and non-electronic credit cards and linking itself to commercial bank accounts. At present, Woori Bank, IBK, KB Kookmin, Shinhan and NH Bank are supporting the Samsung Pay service and the other banks are likely to follow suit soon.
South Korean credit card companies, in fact, released their own mobile card, app card and USIM card services and the like before Samsung Electronics’ launching of Samsung Pay. However, most of their services have failed to gain more popularity than Samsung Pay, which has won over 2.5 million customers in South Korea alone since its debut in August last year.
The number of Samsung Pay users is likely to increase at a more rapid pace over time with the Galaxy S7 coming with the service recently released to increase the number of Samsung smartphones supporting the payment service to seven. A large number of users are satisfied with the convenient payment service with which they can be free from the hassle of carrying a wallet.
Under the circumstances, credit card companies are in a dilemma over their mobile credit card business strategy. It is good news for them that Samsung Pay is increasing the use of their mobile cards but now they could lose the influence of their mobile payment platforms. In other words, Samsung Pay is increasingly threatening their presence in the online payment market these days. This means a decline in their bargaining power with regard to fee negotiations and the like in the future, which could make the maintenance of their credit card business itself more difficult.