|Mobile carriers clash with credit card firms |
Korea's mobile service providers are clashing with credit card companies over wireless transactions and billing services, in a bid to secure better positions in the potentially lucrative "m-commerce" businesses.
Credit card companies have largely monopolized electronic billing and transactions services for offline purchases of consumer items, but their grip on the sector is now threatened by the aggressive moves by mobile carriers.
SK Telecom, the country's largest mobile carrier, is openly demonstrating its will to enter the credit card business as part of efforts to diversify its income sources and carve out a bigger share once the m-commerce market takes off.
SK Telecom, which virtually dominates the domestic wireless market, has a vast pool of customer information and sales networks, and if it goes ahead with the credit card business in the mobile sector, credit card firms are feared to suffer.
SK Telecom plans to launch its mobile credit card service in October by seeking partners in the credit card industry, and is demanding that credit card firms pay about 1 percent as a fee for such m-commerce transactions.
Credit card firms, however, argued that they could not accept SK Telecom's demand, a conflict that analysts said could impinge upon the implementation of transactions through mobile handsets.
Credit card companies are currently collecting 2-3 percent fees from retailers, and if they pay 1 percent to SK Telecom, they said they could sustain losses.
Moreover, major credit card firms are fully aware of the fact that SK Telecom has recently acquired the credit card unit of Jeonbuk Bank to enter the market directly. The take-over move suggests that SK Telecom is likely to emerge in the near future as a strong competitor for existing credit card firms, even though the government has yet to grant a license to the mobile carrier.
SK Telecom remains adamant about getting the upper hand in the wireless commerce business. It said it will put an IC (integrated circuit) chip into mobile handsets from October so that it can send customer information to handsets for m-commerce transactions and instant payments.
Credit card firms claimed that SK Telecom's IC chip method is problematic. SK Telecom's payment and transaction service offers only one credit card company information for each IC chip, a limit that could intensify competition among credit card operators.
The logic is that SK Telecom's exclusive system could put pressure on credit card firms, a position that the mobile carrier will find handy to push ahead with its m-commerce business in an aggressive way.
Meanwhile, SK Telecom forged an alliance with LG Telecom Wednesday, increasing its customer information base from 16.8 million users to 21.2 million users. LG Telecom currently has 4.4 million subscribers.
The larger customer pool means SK Telecom could secure better terms and conditions in fee negotiations with offline credit card firms.
KTF, the country's second largest mobile carrier, is offering wireless transaction and payment services, using a solution developed by a domestic info-tech company. The infrared telecommunication payment system requires lower transaction fees, and Kookmin Credit Card and BC Card have already joined the service as partners.
Realizing the limitations of the simple infrared payment system, KTF is also planning to upgrade its mobile payment service to one based on the IC chip and built-in credit card information.
Mobile service providers are now expected to roll out payment and transaction equipment for their affiliated shops within this year, in a bid to kickstart the fledgling mobile payment market, but credit card firms are dragging their feet to buy some time and strengthen their market positions.
By Yang Sung-jin Staff reporter