Mobile Payment Competition
Banks and credit card companies are in a showdown in the mobile payment market. Banks are releasing debit payment services with credit card firms taking the initiative using payment services based on mobile applications.
Shinhan Bank released My Shinhan Pay on July 10. The mobile debit payment service allows payment without cash and physical card by means of the barcode generated in the application and is currently available at about 25,000 stores. The money is withdrawn immediately from the bank account designated by the customer, and pre-charging is unnecessary, unlike in the e-wallet services provided by Hana Bank and the Industrial Bank of Korea (IBK). The daily payment limit is 300,000 won (US$294), though.
It is the first barcode-based mobile payment service in the banking sector. Although Shinhan Bank, Hana Bank, and IBK have released electronic wallet services such as Zoomoney, Hana N Wallet, and IBK One Money, none of these have been well-received due to the pre-charging requirement.
In the meantime, credit card companies released a series of application-type mobile cards last year to take the banks’ market share. The services’ popularity is skyrocketing because they require only a password on online shopping malls and just a barcode at offline stores.
Still, experts point out that card companies are likely to have a hard time in the mobile payment market down the road, as various banks will copy Shinhan Bank’s service. According to local banks’ analysis, the customer base is wide enough because a lot of customers are using debit cards instead of credit cards or using credit cards as auxiliary payment means.