Korea a trailblazer for NFC payments

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While NFC technology is struggling to catch on in most of the world, more and more Koreans are opting to buy NFC-enabled smartphones like the Samsung Galaxy S3, Note 2 or LG Optimus G.

The short-range radio frequency technology allows people to quickly share data, instantly reprogram their phones and, perhaps most importantly, pay for transportation and other purchases by simply waving their phones over a sensor.

A land of early adopters, Korea may become the global testbed for mobile NFC payments. Korean telecom companies have already sold more than 5 million phones with NFC technology.South Korea m-payments

SK Telecom, the nation’s largest telecom operator, has bet a large part of its future revenue model on NFC-based mobile payments. SKT and other companies plan to take a small cut every time a customer makes a mobile payment. SK Telecom’s main payment app on its NFC phones is Hana Card. Competing wireless carrier, KT, has a similar mobile wallet called olleh Touch. It supports both PayPass and payWave standards through partnerships with Korean card issuers like BC Card.

KT also recently launched MoCa, a cloud-based mobile wallet service that allows retailers to accept payments online as well as in-store, through traditional barcodes, QR codes or NFC. MoCa’s advantage is that it works across all three of Korea’s mobile carriers and on both Android and iOS. Sixty banks, card companies and retailers have already signed up for this service.

MoCa offers an additional benefit as well: In Korea, seemingly every café and store you go to has a membership or loyalty card. It’s nice to accumulate points and get bonuses at your favorite store, but that stack of cards can make your wallet burst. MoCa lets you can link those loyalty cards to your mobile wallet in addition to other coupon and discount capabilities.South Korea m-payments 1

Earlier this year, the Grand NFC Korea Alliance actually ran a pilot NFC shopping zone in one of Seoul’s busiest shopping areas, Myeong-dong. The shopping zone offered customers NFC services such as payments, couponing, smart posters and digital receipts. As NFC expands further in Korea, we can expect to see more of this kind of seamless payment experience.

According to ABI Research, global spending through NFC will surpass $100 billion by 2016 and then grow by almost 100% more by 2017. That’s incredible, considering that NFC payments in 2012 will amount to just $4 billion. One current hindrance to the growth of NFC is that touchless payments are generally relegated to purchases of less than about $30. Once trust builds in the technology, it may eclipse the current credit card industry.

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