Mobile Contactless Payments in South Korea: A Recipe for Future Success?

by KyongSun Kong, September 30, 2010
Industry Trends
Asia-Pacific

Abstract

Buoyed by continued growth, South Korea’s mobile contactless payments market will enjoy average compound annual growth rates in the realm of 50 percent.

In a new report, Mobile Contactless Payments in South Korea: A Recipe for Future Success?, Celent offers an analysis of trends and prospects for South Korea’s mobile contactless payments market. The report looks at the product lineups that are driving the market and issues looming on the horizon that market participants will have to face.

Years of work to pioneer the market are finally beginning to translate into growth. Since around 2009, the mobile contactless payments market has surged to life with mobile carriers and Korea Smart Card Co. (KSCC) collaborating to aggressively roll out the Mobile T-money service. In addition, in 2010 Hana SK Card, a joint venture between Hana Card and SK Telecom, was launched, energizing the mobile credit card market.

“With this innovation afoot, the prospects for growth are bright, but there are obstacles that must be overcome and potential pitfalls that must be avoided,” says KyongSun Kong, analyst with Celent's Asian Financial Services Group and author of the report.

Growth of the mobile contactless market in South Korea hinges on a number of factors, including increased penetration of mobile phones with RF antennas, the spread of mobile contactless payment processing terminals, and new services that differentiate this payment method from conventional cards, and synergies through interoperability

“While the country has yet to clear these hurdles to growth, 2010 has seen a number of new services announced, and it is clear that the mobile contactless payments market is continuing to evolve,” adds Kong.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

Mobile Phones in South Korea

8

 

Toward a Mature Mobile Phone Market

8

 

Financial USIM Chip

11

Contactless Payment Cards

12

 

T-money: Driving the Market

12

 

KSCC: Aiming to Succeed Overseas

15

Mobile Contactless Payments Market

16

Prepaid Mobile Contactless Payments

18

 

Mobile T-money: Dominating the Market

18

 

Smartphones: The Key to Growth

20

Postpaid Mobile Contactless Payments (Mobile Credit Cards)

22

 

Hana SK Card

22

 

The Shinhan Card and KT Partnership

25

 

Prospects for the Future

27

Strategies for Future Growth

29

 

Infrastructure and Business Environment

29

 

Business Model

31

 

Synergies Through Interoperability

33

Conclusions

35

Leveraging Celent’s Expertise

39

 

Support for Financial Institutions

39

 

Support for Vendors

39

Related Celent Research

40

Sign in to download reports and access personalized information