Mobile Payment War
It is now attracting attention who will take the lead in the mobile easy-to-use payment market where people can pay with simple passwords only even though they do not have authorized certificates or credit cards.
According to TrendForce, a market research firm, the mobile payment market which hit US$ 450 billion in 2015, is expected to soar to US$ 1.8 trillion by 2019. Most of all, analysis says that the mobile payment market’s potential is huge as the mobile payment market will be able to create new markets when analyzing the payment behaviors of consumers as big data.
Therefore, in addition to existing e-commerce companies such as Alibaba and eBay, global ICT companies such as Samsung Electronics, Apple and Google are fighting for hegemony in the mobile payment market. On the other hand, there are concerns that credit card companies, which have dominated the existing payment market, will fail to do that in the mobile payment market because they cannot adapt to the pace of the change.
Currently, front-runners in the global simple payment market are companies with e-commerce platforms. The most prominent company is Alibaba. Alibaba's simple payment service “Alipay” has the largest number of users in the world -- about 450 million users. Alibaba is planning to expand its power into the European market through partnership with France's BNP Paribas Bank.
PayPal, the easy-to-use payment service of eBay had a staggering 197 million users as of the end of last year, and is supplementing its weaknesses -- a lack of merchants in the off-line markets –- by joining forces with Visa and MasterCard last year. “Companies with distribution networks such as the Shinsegae Group's SSG and Syrup Pay which is linked to SK Planet's 11th Street will be able to preoccupy advantageous positions in the online easy payment market,” said a representative of the IT industry. “Also, eBay’s acquisition of PayPal catapulted PayPal to its current leading position in the simple payment market. So, distributors will stay strong in the simple payment market for the time being."
Mobile phone makers such as Samsung Electronics and Apple are also said to have secured advantageous positions in battles for the simple payment market. Samsung Electronics has achieved success in the Korean and US offline markets through 'Samsung Pay' based on magnetic security transmission (MST) technology. They say that Samsung Pay is quickly establishing itself thanks to its convenience in payment of just placing Samsung smartphones near cash registers and an advantage to use Samsung Pay at more than 90% of offline stores. Apple is making progress via near field communication (NFC)-based 'Apple Pay' while Google is also expanding its influence with NFC-based Android Pay. However, it will take some time for Apple and Google to take control of the market as less than 10% of offline stores have NFC payment terminals.
It is also worth noting that rapid growth recorded by social network services (SNS)-based simple payment services which subscribers visit dozens of times a day. Tencent, the most popular mobile messenger in China, is pursuing Alipay closely through TenPay, a mobile payment service. In Korea, Kakao and Naver are providing Kakao Pay and Naver Pay, respectively. It is also steadily forecast that Facebook with more than one billion subscribers all over the world can offer its own mobile payment service.
In the mobile payment market, card companies are responding by offering services such as 'App Card' but failing to take control as much as their control over the offline market. "Credit card companies offer different types of mobile payment services and even one credit card company different services such as ‘One Click’ and ‘General Payment.’ This fact is confusing customers,” said Yoon Jong-moon, a researcher at the Credit Finance Research Institute. “Credit card companies will be able to survive in the mobile payment market only when they build one unified payment platform and compete with one another in the platform."