As global ICT companies have pushing into the payment system market, domestic card companies are needed to prepare for it.
According to an insight report titled “ICT Companies’ Entrance into Payment Market and Card Companies’ Counterplans,” Choi Min-ji, an analyst at the Credit Finance Association (CFA), announced on September 4 that global ICT companies are expected to enter the domestic payment market in earnest and card companies are needed to establish a joint infrastructure and enlarge platforms as Apple Pay and Android Pay are recently expanding its service areas in Asia.
Currently, Android Pay and Apple Pay are already providing their services in some Asian countries. Android Pay has been available in Singapore for the first time among Asian countries in June last year. Apple Pay has also been expanding its service areas from China in February 2016 to Singapore in April 2016, Hong Kong in July 2016, Japan in October 2016 and Taiwan in March 2017.
Choi said, “Recently, Google is considering its plan to develop infrastructure in order to introduce Andorid Pay and connect accounts with some domestic credit companies, global ICT firms are expected to break into the domestic payment market in earnest in the next few years.”
She also said, “The effects of the advent of such a new platform on the domestic card industry can be limited in the short term, but they can degrade the bargaining power of the card industry in the future. Global ICT companies can step in the commission sector by using their monopolistic and oligopolistic position.”
In addition, it is possible for some global ICT companies to directly enter the domestic market through the payment services that circle around the existing payment infrastructure like value-added network (VAN) so the card industry can play a lesser role in the domestic payment market.
In this regard, Cho said, “We should enlarge the platforms by establishing a joint infrastructure with card companies in order to brace for ICT companies’ efforts to strengthen their bargaining power. To this end, we should develop the uniform platform that can support all the payment plans, come up with cooperative plans between card companies to standardize payment technologies, and make an effort to standardize technologies between card companies just like the “Korean-type NFC payment standards” case which was established by forming a mobile consultative group consisting of eight domestic card companies and the CFA.”