Google’s Android Pay debut in South Korea will be delayed to next year due to difficulties in negotiation with local credit card issuers. The simple payment system was expected to be launched in the domestic market by the end of this year.
According to investment banking (IB) and information technology (IT) industry sources on October 8, Google and domestic credit card firms have discussed the launch of Android Pay in South Korea from the end of last year but failed to agree on sharing investment costs.
Android Pay is the credit card-linked payment service that allows Android smartphone users to make payment at online and offline stores. The service is based on Android phones that every eight out of ten Koreans own.
However, Google and local credit card issuers failed to reach agreement on how to share the costs of expanding NFC-based terminals that are required to use Android Pay and securing computer systems.
An official from a South Korean credit card company said, “Android Pay is unlikely to be launched by the end of this year and it will be hard to talk about its specific schedule until next year.”
In this regard, Google Korea said, “There is nothing to officially confirm except for the fact that we are still in discussion over Android Pay’s debut in the country.” Google is in talks over Android Pay with most of major domestic credit card issuers. This is because the IT industry expected this spring that Google and credit card companies are about to sign the agreement and Android Pay will be launched in May. However, Google hasn’t revealed the launch date yet.
The South Korean simple payment market is being led by four major players of Naver Pay, Samsung Pay, Kakao Pay and Payco. Samsung Pay, which is the most influential service in the offline payment service market out of the four, doesn't require special NFC-based terminals. It's capable of working with a regular magnetic card readers. Samsung Electronics is also providing “Samsung Pay Mini” service that is available in all Android-powered devices as long as users download the app, beyond the simple payment service that can be used only in Samsung smartphones.
Kakao is planning to introduce the system that enables users to make a purchase by scanning a merchant's QR code with their smartphone cameras soon. The company will also link its services with China’s Alipay that has entered into a partnership with Kakao Pay so that users can make a payment with Kakao Pay in 30,000 offline stores in South Korea affiliated with Alipay.
Naver Pay only allows users to make a purchase at online stores, not offline stores. Payco uses a barcode on the smartphone screen to make a purchase.