Home > Business > Finance

Card firms deny Apple Pay support, sources say otherwise

Published: 13 Jun. 2023, 18:35 Updated: 13 Jun. 2023, 19:38

A model demonstrates Apple Pay at a Starbucks store in Seoul on May 8. [NEWS1]

Card companies on Tuesday denied they had submitted a letter of intent to support Apple Pay, although discussions are very likely to be underway, according to sources.

The denial followed a report last week that Shinhan, KB Kookmin and Woori Card delivered their intent to partner with Apple Pay. The trio is expected to support the payment service sometime between September and October, according to Thursday's report by Etnews.

“Nothing about Apple Pay has been decided, and we haven’t received an official proposal from Apple,” said Park Hee-chul, a spokesperson for Shinhan Card. KB Kookmin and Woori also denied the report.

But industry sources said they are monitoring the movement of other card operators in joining Apple Pay in order not to lose market share, and not because they expect major improvements in their profit.

“It’s a project that should not be accepted if Apple Pay charges 0.15 percent as reported,” said a source who spoke on the condition of anonymity. “Nevertheless, the idea was discussed as we had expected to sell other products, such as card loans, to new customers. But we are less certain about that since its impact has not been far-reaching. Also, it’s become easier for customers to switch cards along with the launch of payment apps.”

The source added, “The project itself isn’t that attractive, but we’d have to follow if Shinhan Card, the market leader, teams up with Apple Pay in order not to lose market share.”

People walk past Hyundai Card building in central Seoul on March 21, the day Apple Pay landed in Korea. [NEWS1]

Apple Pay entered the Korean market in March via an exclusive partnership with Hyundai Card. The payment service, the world’s second-largest digital payment system after Visa, is only available at some stores in the country, including cafes and convenience stores.

A total of 355,000 Hyundai cards were newly issued in a month since Apple Pay's launch on March 21, up 156 percent year on year, and those in their 20s accounted for 51 percent of the new customers. But the amount of credit card transactions for individuals in Korea inched down 1.6 percent in April from a month earlier, according to data by the Credit Finance Association.

The reported 0.15 percent commission rate charged per transaction and installing the Near Field Communication devices required to process Apple Pay have been cited as obstacles to the widespread usage of the payment service.

“The chances of a discussion being underway are probable,” said another source from the card industry who spoke under the condition of anonymity. Card companies are "likely all open to the partnership, at least in the long run, and there’s no reason for Apple Pay to be exclusive since having more users is more beneficial.”

Some card companies are concerned Apple Pay may limit the number of its partners.

“Apple tends to select certain financial companies as their partners instead of widely distributing the service. So there are concerns only early adopters may be able to support Apple Pay,” the source added.

Apple Pay is gradually expanding its sources of usage, including transportation systems, according to local media outlets. Tmoney, a public transportation card operator, is allegedly testing the service to allow users to charge their public transportation cards and check their balances. The service is expected to become available in September, but Tmoney refused to confirm that the test is underway.

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