IT behemoth Apple announced Wednesday it will launch its mobile payments service Apple Pay in Korea, where rival Samsung has already enjoyed a dominant position in the market for years.
“Apple will launch Apple Pay in Korea,” Apple said in a statement without further details.
Apple's local partner, Hyundai Card, also released a statement saying it looks forward to collaborating with Apple to introduce the digital wallet to South Korea.
"We will share more details in the coming months,” it added.
This is the first time the two companies have made their partnership official.
Although a Hyundai Card spokesperson declined to disclose the service's launch date, experts here expect Apple Pay to be launched well within the first half of the year, likely in March or April.
The rollout of the US IT giant’s digital wallet is expected to strengthen competition in the local mobile payments market that is dominated by Samsung Electronics' Samsung Pay, which started its service in Korea in 2015.
Although Apple Pay is used by over 500 million people in more than 70 countries, in Korea, Samsung Pay reigns supreme with over 16 million users.
Since 2020, rumors have circulated that Apple Pay was looking for a partner to launch its services in Korea. In October last year, a leaked document of the terms and conditions for Hyundai Card customers using the Apple Pay service further fanned the flames.
The launch of the long-awaited digital wallet, however, hit some snags. Even after Korean financial authorities finished a review of Apple Pay’s terms and conditions in December, an additional review on issues related to the installment of payment devices with near-field communication technology took longer than expected.
On Feb. 3, the financial regulator finally announced that local credit card firms can now introduce Apple Pay, adding that it hopes the introduction of the new service could enhance convenience for customers.
The Financial Services Commission also said local credit card companies should not pass on costs arising from the use of Apple Pay to customers or store owners.
During the FSC review process, Hyundai Card also had to give up its exclusive partnership with Apple Pay.
Industry insiders expect that even without the exclusive partnership, Hyundai Card will likely be the sole partner of Apple Pay and enjoy a first-mover advantage for around half a year as it will take some time for Apple to sign partnership deals with Hyundai Card's competitors here.
Hyundai Card decided to drop the exclusive partnership because the Korean credit card company would not be able to provide compensation to its key retailers for installing a new near-field communication device used for Apple Pay, as it is subject to antitrust scrutiny.
The lack of a prevalent NFC device in Korea is one of the key obstacles to Apple Pay’s expansion.
Most local retailers here use magnetic secure transmission, or MST, technology, in which devices such as smartphones emit a signal that mimics the magnetic stripe on a traditional payment card.
Currently, users of Samsung Pay can pay with both MST and NFC technology.
Nonetheless, Apple Pay works with only NFC technology, a short-range wireless technology that is applied to a limited number of large franchise outlets such as McDonald's, Starbucks, Ediya Coffee and Lotte Hi-Mart in Korea.
According to industry sources, less than 10 percent of 2.9 million stores with card readers use NFC technology in Korea.
Since it costs around 150,000 won ($119) for store owners to install the new card reader with NFC technology, the lack of technological infrastructure remains a hurdle for Apple Pay.
Meanwhile, Hyundai Card Vice Chairman Chung Tae-young has been hinting on social media since Jan. 14 that the Korean card company will soon provide Apple Pay.
After posting a picture of apples with a caption that says "Lovely Apple" in January, which immediately reignited speculations of Apple Pay's Korea launch, he also posted a picture of an apple missing a bite last week in a not-so-veiled reference to the collaboration.
On Monday, he posted a picture of the card company’s employees grabbing from a table with apples in the lobby of the Hyundai Card headquarters in Seoul.
