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Finally, Apple Pay in Korea

After a decade of waiting, Apple Pay has expanded to Korea. Korea remained the only developed nation country that did not support Apple Pay. 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, and card companies decided not to introduce EMV, leaving only the minimum compatibility layers. They subsequently made two major decisions: to develop their own NFC standard and to focus on payments using IC chips. The first strategy is 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. This 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. Due to the existence of Samsung, the service linkage with the government was always two steps slower for iPhone, and Apple did not pay much attention to the Korean market when Samsung listened to the voice of the domestic market and fixed the inconvenience. Korean finance market also used ancient architectures, also made things worse.

Apple. Apple didn't push hard, either. Korea is a market with terrible value for money. It's less loyal to Apple than Japan and is overflowing with potential buyers like China. Samsung continued to rival Apple while producing their silicons. LG continued to compete with the iPhone in the Korean market. Even Apple Korea had a few sales teams until 2015, not caring much about the market.


Ted Chung and Hyundai Card. When he took over as CEO of Hyundai Card, Hyundai Card was at the bottom of the industry. However, he invested considerably in cultural business and intensely promoted the concerts of numerous foreign stars. I wonder if it's Ted's taste, but it is clear those businesses overwhelmingly helped Hyundai Card. 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. And Hyundai Card was looking for another breakthrough that would again revitalize their business among young people.

Apple and Underdogs. Apple always joins with the underdog when entering a new market. When it first entered the mobile phone market, Apple partnered with Cingular (now AT&T). Second-place companies are always more lenient and flexible to Apple's requirements, and this is how Apple nailed the random-access voicemail part for their first iPhone. Similarly, Hyundai Card was the perfect underdog. It was gaining overwhelming support from the younger generation as a cultural business expanded, and Ted Chung himself was also a loyal customer of Apple. 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 the decisive deal, while Hyundai accepted most of Apple's conditions, Hyundai Card acquired 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 troubled Korean banking system.