After the launch of Apple Pay in South Korea, Samsung is changing its whole strategy around Samsung Pay. The company's mobile payment service was free for consumers and credit card companies. However, the South Korean firm plans to charge credit card companies in a fashion similar to Apple.
Samsung Electronics has reportedly notified all credit card companies in South Korea that it will no longer extend the Samsung Pay service for free. First launched in 2015, Samsung Pay has been a free service for credit card companies (banks) and consumers (Galaxy phone users). In the future, though, Samsung will start charging credit card companies a nominal fee in South Korea. This strategy could be expanded to all the markets worldwide where Samsung Pay is available.
Similar to Apple Pay, Samsung Pay may be chargeable for credit card companies in South Korea
Samsung's decision has put credit card companies in a soup, and they could be in for a loss. These companies say they heavily marketed Samsung Pay over the past eight years to over 16 million users, thinking it would remain free. Now, they're blindsided by Samsung. To cut their costs, they may reduce the benefits they used to offer to their end users. While the government has said that contracts between the companies are autonomous, it may intervene if the charges are passed on to consumers.
Simple credit card companies are losing market share to tech giants like Apple and Samsung and fintech firms like Naver. Recently, Samsung Pay tied up with Naver Pay to enable users to make online payments via Samsung Pay. It also plans to activate Samsung Pay on Galaxy Watches in South Korea to compete with Apple Pay.
