Apple Pay, which made its entrance in South Korea in partnership with Hyundai Card, is set to face scrutiny at the National Audit. The National Assembly is expected to delve into issues such as the reportedly higher fees compared to Samsung Pay during this audit.
According to financial sources on Oct. 8, Kim Deok-Hwan, the CEO of Hyundai Card, is slated to appear as a witness at this year’s Financial Committee National Audit regarding Apple Pay. Mark Lee, the head of Apple Korea, is also being summoned.
The National Assembly’s Political Affairs Committee explained that the reason for summoning CEO Kim was to investigate concerns over the increased cost burden on consumers and usage inconveniences following the introduction of Apple Pay. The merchant fees for Apple Pay are known to be significantly higher at 0.15%, compared to Samsung Pay’s 0.03%. These payment fees are being pointed out as a reason for the slow adoption of Apple Pay. Critics have raised concerns that Hyundai Card initiated bloody competition in the industry by agreeing to such high fees with Apple Pay.
There have also been ongoing concerns that Apple’s high fees would eventually be passed on to consumers. The Political Affairs Committee plans to hear both Apple and Hyundai Card’s perspectives to ensure a fair mobile payment market.
Meanwhile, Apple Pay, which launched last March, hasn’t been living up to expectations. According to the Credit Finance Association, Hyundai Card saw an increase in new memberships for three consecutive months since introducing Apple Pay. However, it dropped to third place in June, overtaken by KB Kookmin and Samsung Card. In July, it slipped to fourth, overtaken by Lotte Card, and recorded fifth place among nine card companies in August, trailing behind Samsung, KB Kookmin, Lotte, and Shinhan Card.
A member of the Political Affairs Committee mentioned, “The amount transacted through Apple Pay has been underwhelming compared to our expectations,” hinting it might be why other card companies are hesitant to adopt Apple Pay.
According to card industry sources, Apple has indicated its willingness to disclose its Apple Pay contract terms to domestic card companies. Initially, companies like Shinhan, KB Kookmin, and BC Card were known to have shown interest in Apple Pay. While these companies were considered late adopters of Apple Pay, issues like high fees remain barriers to an agreement.