From smartphone-makers to retail firms, more companies are jumping on the mobile payment bandwagon in a bid to take the initiative for hassle-free digital payments.

As there is no single dominant player or set of standards yet, the mushrooming mobile payment market is flooded with more than 20 related applications in Korea and may look like a hodgepodge of technologies for some.

Many industry officials, however, had a positive outlook on the fledgling market, anticipating that the mobile payment systems would further proliferate and one day kill plastic cards.

“There will be a tenfold increase in the mobile payment services next year, and it is highly likely considering the great growth potential with most websites requiring online payment solutions,” forecast Park So-yeong, chief executive of electronics payment PayGate and chairperson of the Korea Fintech Forum, an organization for the financial technology sector.

She added that the market needs a set of standards in order to enhance convenience for consumers, and small retailers that may want to adopt the contactless payment technology in the coming years.
 

Some said that the growing number of mobile payment apps ironically cause inconvenience due to the lack of standardized technologies, arguing new payment services will come and go until the emergence of strong market leaders.

“Even Kakao, operator of Korea’s most used mobile messenger, has not been able to rule the mobile payment market,” said an industry source, adding that the firm’s KakaoPay takes up less than 10 percent of payments on Baedal Minjok, the largest food ordering app in Korea.

Other mobile payment services providers include retail colossuses Shinsegae and Lotte, Internet giant Naver and LG Electronics.

The Korean mobile payment market more than quintupled to 5.7 trillion won ($4.9 billion) in the second quarter this year from 1.1 trillion won in the first quarter of 2013, according to state-run statistics organization Statistics Korea.

Highly considered as one of the potential market leaders, Samsung is gaining momentum to win the mobile payment race.

After U.S. tech giant Apple launched contactless mobile payment system Apple Pay last year, Seoul-headquartered Samsung Electronics rolled out its own system in August.

Despite its somewhat belated start, Samsung Pay has been garnering quite an upbeat response from reviewers and users around the world.

Accumulative payments crossed the 100 billion won mark with the number of Samsung Pay subscribers exceeding 1 million in two months since its launch in Korea.

Samsung Pay is often said to have a competitive edge over Apple Pay thanks largely to its better compatibility with the Magnetic Secure Transmission and Near Field Communications technologies.

Apple Pay allows users to make purchases only with NFC terminals while Samsung Pay is compatible with both magnetic swipe and NFC terminals.

“Some even say Samsung Pay is the last hope for the Korean tech giant’s mobile business unit, which is being squeezed hard between Apple in the premium handset segment and Chinese upstarts in the low end,” a market official said.

The tech behemoth is also beefing up partnerships with credit card firms and banks to allow Samsung Pay users to use ATMs with the mobile service.

Some of the global financial firms include Chase, Visa, American Express and MasterCard.

Local investment firm BNK Securities anticipated the shipment of Samsung smartphones equipped with Samsung Pay worldwide will reach 22.5 million units -- 11.4 million in Asia and 11.1 in North America -- next year.

The increasing popularity of the Samsung payment solution and the expanding mobile payment ecosystem has become a boon for Samsung’s partners and component makers for biometric sensors -- used in smartphones to authenticate users.

Among the beneficiaries are the Korea Information Certificate Authority, which develops user authentication solutions, and Amotech.

KICA provides fingerprint identification solutions for Samsung Pay and the latter supplies chip modules used for the payment system.

KICA’s share price doubled to 21,000 won in the two months since Samsung Pay was released, and is now hovering between 12,000 won and 14,000 won.

It is also expected that Samsung would install its payment solutions in a variety of its products, including smart TVs, mid-range and low-end smartphones, running on the Tizen operating system.

The Tizen OS has been jointly developed by a group of global tech firms including Intel.

Fingerprint scanners will be more widely deployed in budget Samsung smartphones to beef up security of the mobile payment app.

By Kim Young-won  (wone0102@heraldcorp.com)