Apple Pay may cause seismic shift in Korea’s contactless payment market

[Photo by Yonhap]

Apple Pay, which was recently launched in South Korea, is signaling a seismic shift to contactless payment in the country’s primarily contact-based payment infrastructure.

Apple Pay uses chip and pin technology, or EMV, a security system already used in Europe on plastic credit cards. EMV is a near-field communication payment standard created by major card companies such as Visa, MasterCard and Europay. Apple Pay makes contactless payments through NFC terminals that adopt the EMV contactless method.

According to sources on Wednesday, the overall installation of NFC terminals with EMV contactless technology after the release of Apple Pay in South Korea has not yet been fully tallied as it has been only about a week since the release.

Such terminals are installed directly by franchise headquarters or franchisees or with the support of card issuers such as Hyundai Card. However, the advantages of EMV contactless technology, such as faster payment processing and the ability to make payments without network connections, have been touted by Apple Pay users and it has spread by word of mouth, according to industry insiders. Before and after the launch of Apple Pay, there was an increase in promotions from vans, such as point-of-sale (POS) machines and POS fee support for NFC terminal purchases.

[Photo by Lee Seung-hwan]

Apple Pay is not the only payment system that is changing the payment landscape in South Korea. After more than three years of pandemic-related visa restrictions, Chinese tourists can now visit South Korea, and big commercial districts are busy preparing to make AliPay and WeChat Pay, which are popular among Chinese tourists, available at many stores.

Like Apple Pay, Alipay uses EMV standards, but it is a QR code-based payment method, while WeChat Pay sends money via the user’s phone as long as the user has an eligible account.

EMV contactless payments are also gaining attention as a convenient payment method that can be used by Korean users when traveling overseas. Because payment can be made without a network connection or a local SIM card, it is becoming a popular payment option. Some expect that payment methods will evolve beyond mobile phones and wearable devices to include rings and stickers that integrate EMV contactless technology, as it does not require a separate network connection.

In addition, the Tap to Pay function, where iPhone users and store owners can make payments using their iPhones, is also spreading in the U.S. and is seen as a factor that could affect the domestic payment market. However, the possibility of introducing the Tap to Pay feature in South Korea is still unclear.