As Internet companies such as Kakao and Alibaba and telecommunication service providing companies are joining the mobile payment market in addition to commercial banks and credit card companies, a fierce war among players in the rapidly-growing mobile payment market is expected.
LG U+ announced in August the launch of Paynow+, a security and convenience enhanced successor its existing mobile payment service Paynow, and to officially start providing services.
On that day, LG U+ explained that Paynow+ has passed all security tests of the Financial Supervisory Service, from user verification to payment, for the very first time as a domestic payment service provider. LG U+ added that security has been greatly enhanced by enabling users to choose among a total of five verification methods: dementor graphics image combination, ARS, password, security pattern, and mobile One Time Password.
LG U+ has already secured 100,000 online member stores and plans to expand to over 150,000 members including major social commerce companies, open markets, and portals within this year.
As LG U+ jumped into the mobile payment service market for the first time as a telecommunication service providing company, intense competition among companies is expected.
Industry estimates the size of the mobile payment market in Korea at 12 trillion won (US$11.7 billion).
Recently, various companies including KG Inicis, Smart Wallet, and Kakao are fighting against one another very fiercely by introducing their own services competitively.
In the meantime, as foreign companies such as Alibaba and Paypal are also targeting the Korean mobile payment market, Korean companies are allying against foreign players.
LG U+ also emphasized that it wants to contain foreign companies along with Korean companies. LG U+ has created partnerships with Shinhan Card, BC Card, and Hana SK Card, and announced that it would add NH Nonghyup Card and KB Kookmin Card, and ultimately cooperate with all credit cards within this year.
Industry forecasts that more companies will join the competition as the government begins to allow simple payment services without Active X.
While new companies are actively entering the market, credit card companies which already established presences in this market previously are in complex situations. They do not project that electronic payments based on mobile platforms will grow very fast.
Card companies, which started mobile payments businesses in 2010, have not yet reaped a good harvest. According to the card industry, mobile payments account for only 1 percent of the entire credit card transaction market, which is the size of 560 trillion won (US$547 billion) annually.
A credit card company employee said that despite the proactive participation of Korean IT majors including Kakao and foreign payment gateway (PG) companies in mobile payments, their influences are hard to predict. This person also added that making existing users comfortable with simple payment platforms is the key to success.
On the other hand, as many companies are entering the simple payment market, there are concerns about security issues.