An increasing number of global IT companies are entering the mobile payment market. Industry analysts are saying that the phenomenon is due to their anticipation that the mobile payment sector will become the foundation of all industries in the future, rather than their desire to get profits from mobile payment services.
Therefore, a growing number of people in the industry are pointing out that it is urgently needed to foster the financial technology (fintech) industry, which encompasses the mobile payment sector.
According to market research firm Gartner on Dec. 15, the global mobile payment market is estimated at over 300 trillion won this year (US$277 billion), and is expected to grow 30 to 40 percent year-on-year to reach 800 trillion won (US$737 billion) in 2017.
However, experts are saying that the attraction of the mobile payment market lies in its far-reaching influence on other industries, rather than its own growth rate.
Kim Jong-dae, senior researcher at LG Economic Research Institute, explained, “Compared to the size of the market, which reaches 800 trillion won [US$737 billion], fees that mobile payment service providers can collect are likely to amount to only 5 trillion won [US$4.6 billion] at best.” He added, “Global IT enterprises that want to dominate the mobile payment market are trying to differentiate their services and to dominate all sorts of e-commerce platforms through mobile payment services, instead of focusing on revenues by charging fees.”
Currently Apple, Google, Amazon, and Alibaba are actively seeking to dominate the mobile payment market.
Apple's development of mobile payment and digital wallet service Apple Pay is attributable to its intention to sync with its mobile devices, including the iPhone, iPad, and Apple Watch, rather than collecting fees. The move is aimed at dominating a new market, like the wearable device market, by expanding the sale of mobile devices through Apple Pay and also maintaining existing customers.
Kim said, “Once customers are accustomed to Apple Pay's convenient user experience, the power of Apple's mobile devices will be strengthened further.” He added, “iPhone users will be reluctant to use other Android phones, since it will be a hassle. Moreover, the Apple Watch will become a must-have item in mobile payments, owing to the possibility of using Apple Pay without taking out the iPhone.”
There are no additional fees on Google Wallet aside from credit card fees. Instead, Google intends to generate profits by securing data such as the purchase history of individual consumers from its payment service, thus turning it into useful information for marketing and customized ad services.
Hence, many in the industry stress that it is urgent to nurture the fintech industry. The local industry is planning to foster the sector based on mobile messaging app users, but the industry has a long way to go. Large platform providers such as Daum Kakao, Naver, and NHN Entertainment are preparing for the fintech business with the release of mobile payment services.
Daum Kakao already launched simple payment service Kakao Pay and mobile money transfer service Bank Wallet Kakao. Naver is going to roll out Line Pay in Japan via messaging app LINE. NHN Entertainment has decided to grow the mobile payment area based on an e-commerce platform with its acquisition of Korea Cyber Payment.