Apple is set to launch its Apple Pay service in South Korea, one of the fastest growing countries in the world for cashless services but so far untapped by Apple and the other major player in the smartphone platform, Google. South Korea’s financial regulator is currently reviewing the launch clause for the Apple Pay service submitted by local credit card company Hyundai Card, the Financial monitoring service (FSS) confirmed to TechCrunch.
The FSS declined to provide further details. According to this Yonhap Infomax Reportthe FSS review to offer approval for Apple’s digital payment service could take between one and two months, and be completed as soon as the end of this month.
Apple Pay will support Hyundai Card, a financial unit of Hyundai Motors. Hyundai Card would have a One-year exclusive partnership with Apple Pay in South Korea, which means that initially only Hyundai cardholders will be able to use the Apple Pay service in the country.
Hyundai Card declined to comment. Apple did not respond when reached by TechCrunch.
Rumors of an Apple Pay launch in South Korea swirled since last month when an iPhone user posted on a blog what appeared to be the terms and conditions for Apple Pay in South Korea, which included details of Apple Pay’s involvement with Hyundai Card. He also said that the terms and conditions will officially come into effect from November 30, 2022.
Hyundai Card, which has yet to release an official statement, did not say whether the leaked document was genuine.
Despite being home to some of the largest Android device makers in the world, South Korea remains an important market for Apple’s iPhone. As of October 22, iOS held a 31% market share in the country. Enabling Apple Pay would give these and other Apple device users access to an Apple Wallet to store and use payment methods to make in-person and online purchases.
South Korea is one of the most connected markets in the world, with high broadband and mobile penetration and usage patterns, as well as fintech in general and mobile payments in particular. Even before the pandemic and the global boost it gave to e-commerce around the world, cash accounted for only 17.4% of total transactions in 2019 in South Korea.
But while smartphone operating system giants Google (Android) and Apple (iOS) are synonymous with mobile payments and mobile wallets in some markets, they are absent in South Korea, where local payment service providers mobile, such as Naver Pay, Kakao Pay and Samsung Pay have the most used in the country.
It’s not because Western companies haven’t tried. Apple Pay and Google Pay have reportedly tried to enter South Korea since 2020 and 2017, respectively. Some said one of the issues was the lack of NFC support on payment terminals: near-field communication, the low-power radio system allowing short-range data transfer at distances of around 3 inches, or 10 centimeters, between a terminal required by retailers and a device, is at the heart of how Apple Pay and Google Pay work.
In South Korea, only around 10% of the 2.9 million local retailers have enabled NFC technology on their credit card terminals. Mostly, Korean retailers use Magnetic Secure Transmission (MST), a mobile payment technology that allows smartphones to make wireless payments with traditional credit card readers and terminals. Once Apple’s payment service is introduced, most local retailers will need to implement new terminals for NFC payments for Apple Pay users. (Samsung Pay uses both MST and NFC.) Apple allegedly requires the card issuer to pay a commission rate of 0.1 or 0.15% of the transaction amount.
If (or when) Apple Pay goes live in South Korea, it will be the eleventh country in Asia-Pacific to support Apple’s digital wallet and payment service. The Cupertino-based company already operates its payment services in Australia, China, Hong Kong, Macao, Taiwan, Japan, Singapore, Kazakhstan, Malaysia and New Zealand.