Plastic Cards Disappear: Korean Credit Card Companies to Introduce a Joint Mobile Payment System in March

Eight domestic credit card firms have completed the development of NFC standard “JUSTOUCH” and will jointly promote it by supplying 25,000 readers across the nation by the end of next mont

(businesskorea) South Korean credit card companies will offer a “mobile payment” service using the near field communication (NFC) technology as early as the end of March. Near field communication is a next-generation technology which is generally used in electronics devices such as smartphones, laptops, and tablets for short range of data exchange up to 10cm or less. Using the technology, consumers can make a payment without an actual card by placing their smartphone near a card reader.

According to investment banking industry sources on Feb. 13

, eight domestic credit card firms have completed the development of NFC standard “JUSTOUCH” and will jointly promote it by supplying 25,000 readers across the nation by the end of next month.

Some credit card companies, such as Lotte Card, Shinhan Card and Hana Card, test operate a NFC-based payment service but the service cannot enter into general use due to a lack of reader supplies. Accordingly, eight firms are planning to supply 89,000 readers by the end of this year. As the card companies believe that plastic cards with magnetic strips can be useless in the future, they are planning to proactively introduce the next-generation NFC technology to push into the mobile payment market.

In particular, they are concerned about the possibility of Chinese counterparts encroaching on the domestic market if they don’t take action now as mobile payment is very common in China. An official from a credit card company said, “QR code payment is widely used in China so it is hard to find a plastic card there. Jumping into the mobile payment market, card companies feel the need to set up its standards and co-respond to it.”

Some market watchers say that credit card firms can also cut labor costs of those who encourage consumers to issue a plastic card by introducing the NFC-based payment. Others also say that they are accelerating the introduction of the NFC-based payment in order to lower labor costs in the long term as they are facing lower performance because of lower commission charges for credit card affiliate members. 

By Yoon Yung Sil