Users of second-generation mobile phones will be given a one-year grace period to access virtual machine banking services to refer to their details of use and perform banking functions.

Late last year, mobile carriers announced that they would terminate the VM banking service within the year due to low profits, but decided to hold off on pulling the plug until December this year, consenting to the arbitration of the Financial Supervisory Service.

The VM banking service kicked off back in 2007 in order to enable users to perform financial tasks on their 2G mobile phones.

As of the end of 2011, the number of users stood at 9.8 million and the yearly sum of money transferred was 102 trillion won ($9.3. billion) but the market size has fallen sharply since the launch of smartphones.

Users of VM banking accounted for 1.77 percent or 3 trillion won ($2.8 billion) of the mobile banking market in the third quarter last year. The number of users, too, dropped to 60,000, according to the FSS.

Reflecting this rapid decline, the nation’s top three mobile carriers ― SK Telecom, KT and LG Uplus ― announced in October that the VM banking would be terminated.

But their partner banks claimed that a sudden termination would cause confusion in the market and requested that financial authorities arbitrate the case.

“The mobile carriers took a big step back and agreed to compromise on the grace period,” an FSS official said.

By Bae Hyun-jung (tellme@heraldcorp.com)