Finally, Apple Pay in Korea

After a decade of waiting, Apple Pay is finally in Korea. Korea was the only developed country without it. Why did it take so long?

The Early Days

Card companies. Korean citizens use credit cards a lot. Card companies did not need to stimulate credit card consumption, a different start. When a stable income is guaranteed, why try hard? They found no need to introduce Europay-Mastercard-VISA (EMV) NFC standards with high fees, so they decided not to introduce EMV and left only the minimum compatibility layers. Then they made two major decisions. Develop their own NFC standard, and focus on payments using IC chips. The first was JUSTOUCH. (If JUSTOUCH were successfully spread at this time, it would've likely become an exceptional NFC standard in Korea, such as Japan's Suica. But they never succeeded.) Eventually the new wave of payment terminals deactivated NFC by default due to low usage, and IC cards became the norm. That removed the last few reasons to bring in Apple Pay and EMV with their high fees.

Consumers. Korean consumers also had the perception that using an iPhone meant accepting inconvenience. Because Samsung exists, government service linkage was always two steps slower for iPhone, and Apple did not pay much attention to the Korean market while Samsung listened to the domestic market and fixed the inconvenience. The Korean finance market also used ancient architectures, which made things worse.

Apple. Apple didn't push hard either. Korea is a terrible value-for-money market. It's less loyal to Apple than Japan and is overflowing with potential buyers like China. Samsung kept rivaling Apple while making their silicon. LG kept competing with the iPhone at home. Even Apple Korea had a few sales teams until 2015, not caring much about the market.

Then

Ted Chung and Hyundai Card. When he took over as CEO of Hyundai Card, Hyundai Card was at the bottom of the industry. He invested considerably in cultural business and intensely promoted concerts by numerous foreign stars. I wonder if it's Ted's taste, but those businesses clearly helped Hyundai Card overwhelmingly. Hyundai Cards began to gain market share from younger generations with their stylish designs, and Hyundai Cards became the revolutionary icon among old-fashioned Korean card companies. Then Hyundai Card was looking for another breakthrough that would again revitalize their business among young people.

Apple and Underdogs. Apple always teams up with the underdog in a new market. For its first phone it partnered with Cingular (now AT&T). Second-place companies are always more lenient and flexible with Apple's requirements, and that is how Apple nailed the random-access voicemail on the first iPhone. Hyundai Card was the perfect underdog, too. It was gaining overwhelming support from the younger generation as its cultural business expanded, and Ted Chung himself was also a loyal Apple customer. They chimed in.

Final Offer. To push the stagnated negotiations, Hyundai made a special deal for Apple, to pay a stipend of half of the entire terminal replacement costs. Thanks to that decisive deal, Hyundai accepted most of Apple's conditions and got an exclusive one-year contract with Apple. Hyundai, committed to bringing Apple Pay to the nation, later gave up this privilege after the Financial Services Commission determined this could fall under anti-competitive action.

With Hyundai Card, Apple Pay will be introduced in Korea in March. What will this mean for Korean customers and the Korean market? There are a few observations, but that's for another day. I hope Apple Pay becomes a new stimulus for the troubled Korean banking system.