Korea driving mobile payments through open standards
I am consistently amazed at the rapid pace that Korea develops new technology, and the equally rapid pace at which Korean consumers adopt it.
Smartphones were introduced in Korea in 2009 and are expected to number 20 million by the end of this year; an increase of 10 times compared to 2010.
With the increasing number of users, smartphones have changed the role of mobile phones from a “communication device” to a “computer in my hand.”
With smart phones, consumers can now check email, browse the Internet and even make payments without having to carry around their wallets.
Accompanying this trend is the question of when mobile payments will become commonplace. While traditional card and cash payments are not likely to go away soon, the widespread adoption of technologies such as Near Field Communication (NFC) may speed the adoption of mobile payments.
NFC technology is a set of short-range wireless technologies that can beam and receive information at a distance of up to 10 centimeters. It enables simple two-way interactions between electronic devices for the transfer of information or payment data.
When making mobile payments with NFC technology, the phone owner simply needs to wave the phone near the reader to make the transaction. NFC is expected to be a standard feature of next generation smart phones.
As NFC goes “mainstream,” not only Korean consumers will benefit. NFC technology is also likely to present business opportunities for Korean companies, big and small.
The full applications of NFC are just being discovered, meaning opportunities for consumer electronics and mobile device manufacturers, semiconductor producers, network operators, service companies and financial institutions. However, in order to enjoy the full benefits of NFC, it is critical that Korea works within the open and global standard that the technology affords.
It is a positive sign to see the strong collaboration amongst Korean government agencies, financial institutions and mobile communication companies to support this new technology, and set NFC standards.
However, it is important that these discussions not be exclusionary, or focused only on the domestic market. All relevant stakeholders should be included in these NFC discussions, with the goal being an open and globally interoperable standard.
Korea has earned its place at the global table by developing solutions for both international and local use. Mobile payments mean commerce, the lifeblood of any economy.
Alliances by mobile carriers across countries, focused on mobile payments, are already happening and recognize the global opportunity that mobile payments can facilitate.
Korea is well placed to lead the world in the roll-out of mobile payments. HanaSK, formed through the partnership of Hana Bank and SK Telecom, is already a global leader in payment application downloads to consumer handsets. The marriage of BC Card and Korea Telecom will further accelerate local innovation.
Lastly, Korea’s IT prowess will position it well to take the lead as mobile payments truly begin to replace traditional cards and cash. The key will be open competition, and open standards, to allow for global success.