Apple Pay arrives in Korea with beta test performance

Finance

Apple Pay arrives in Korea with beta test performance

Published: 21 Mar. 2023, 17:51 Updated: 22 Mar. 2023, 09:53

An image of Apple Pay processing through an iPhone [APPLE]

More than 170,000 users registered with Apple Pay in Korea on the first day it was available in the country, causing unexpected disruptions.

After years of rumors and speculation about the arrival of the service, it landed like a beta launch.

The payment system didn't work for some customers as it was overloaded, according to Hyundai Card, an Apple Pay local partner.

Around 170,000 people signed up for the service as of Tuesday morning.

It was widely welcomed by iPhone users, although some are complaining of its limits.

“I don’t have to personally give my smartphone to a shop assistant, and the payment is complete upon bringing the device near the terminal,” said an anonymous commenter on a community website for workers. Another commenter wrote, “I’ll just use cards. There are so many stores that don’t support” the payment.

Apple Pay became available Tuesday on Apple devices, including iPhones, Apple Watch and Mac.

The service is currently only available through Hyundai Card, but Apple is in talks with other local card companies. Visa and Mastercard products from local issuers also support Apple Pay.

Duncan Olby, who oversees Apple Pay internationally, speaks at a press conference held at Hyundai Card Understage in cetnral Seoul on Tuesday. [APPLE]

Apple Pay payments can be only processed at stores that support near-field communication (NFC), which is a short-range wireless connectivity technology. The device was one of the obstacles blocking Apple Pay’s entrance into Korea, as it is not commonly at stores and is costly, at around 150,000 won ($115) per unit.

The penetration rate for NFC devices in Korea is under 10 percent, according to Kim So-hye, an analyst at Hanwha Investment & Securities, in a report last week.

Retailers that support NFC include CU and GS25 convenience stores, Lotte Department Store, Costco, Homeplus, Lotte Mart and PaulBassett, according to Duncan Olby, London-based director of Apple Pay & Wallet, according to his LinkedIn page. Apple wouldn't confirm the title.

Apple Pay said its payment method is highly secure.

The card number is not saved on Apple servers, and information on the products and services an Apple Pay user buys through the payment system is not shared with Apple, Olby added. Only the customer, the store and the bank or card issuer have that data.

The introduction of Apple Pay helped in the adoption of the EMV payment processing method used globally, said Ted Chung, Hyundai Card vice chairman and CEO, at the event.

EMV is a technology toolbox that enables globally interoperable secure payments.

Ted Chung, Hyundai Card vice chairman and CEO, speaks at a press conference held at Hyundai Card Understage in central Seoul on Tuesday. [APPLE]

Chung added NFC devices will be widely used through Apple Pay, marking “a milestone in Korea’s payment” market.

Daily average simple payments totaled 720 billion won in the the first half of last year in Korea.

Electronic financial businesses, including Naver, Kakao and KG Inicis, had about 50 percent of the market and Samsung Pay about 24 percent.

“Impacts of Apple Pay on the existing simple payment services will be limited,” Kim said.

“The purpose of Apple’s simple payment market is seen to be the expansion of market share for its handsets, which is at about 20 percent. Its purpose through Apple Pay is to prevent iPhone users from switching and to absorb Galaxy users that were reluctant to switch the operating system due to the convenience of the payment service.”

An image of Apple Pay processing through an Apple Watch [APPLE]

The possibility of Apple Pay in Korea first surfaced in the local press in 2015. In September last year, a Korean iPhone user leaked on Naver what appeared to be the terms and conditions for the use of Apple Pay in Korea.

Apple Pay is available in more than 70 countries worldwide.

BY JIN MIN-JI [jin.minji@joongang.co.kr]