Mobile Phone Shots rather than Scratches

▽Replace card= Mobile telecom companies such as KTF, SK Telecom, LG Telecom, etc began mobile phone payment business (mobile commerce/M commerce) in earnest.

KTF will introduce the 2nd up-graded mobile in the end of this month following introducing the first M commerce mobile phone in May. SK, LG Telecom will begin to invite subscribers and networks shops from November.

Kim Ho-sung, senior officer of M Finance Headquarters, explained “the headquarters has tested for the last one year through the basement arcade of SK Building, Sering-dong, Chongro-gu, Seoul by distributing mobile phones equipped with M commerce function to 200 staffs.

M commerce means transaction by mobile phone. So the function of card is embedded in mobile phone and clears a payment using it instead of card.

The M commerce mobile phone is very popular partly because the user can keep wallet thin without many cards, and partly because the phone is excellent safe payment method.

If a user wants to use a mobile phone like card, first he/she should purchase a purposed mobile phone and IC chip from a credit card company. If a user joins a credit card company, he/she will receive IC chip by mail, then insert it into mobile phone.

When clearing the payment, the phone shot laser like television remote controller instead of ‘scratch’. So it is a form of credit card is concealed in a phone, and the bill is separated from telephone bill. So the payment of card can be delayed.

▽ The change of customer management= as a communication company perceives a Mr. Kim, senior officer, is passing Dongdaemun Toll Gate, sends a letter message to him.

‘ You are going hometown first for last 5 months. Do you like to prepare a massage machine as Thanksgiving Day gifts machine from X mart cooperated with our company? Your father receives medical treatment for a joint disease, doesn’t he?’

This kind of customized advertising can be possible only for the business possesses the information on customer’s transaction. In other words, only for the business possesses the chip. So communication companies and card companies already began to compete to possess the chip. However, communication companies maintain the general trend. So it is very difficult to forecast who will domain the chip.

▽ the reason for communication companies are in superior position= If a customer shots mobile phone, VAN company managing payment system of the shop transfers customer information to card company, and the card company permits payment after confirming identification. In existing card transaction, about 10 of VAN and card companies compose networks like web and perform interactive services. So a customer can clears payment regardless the kind of card. However, communication companies insist to manage directly VAN companies independently from the clearing networks. VAN companies are separated into two parties KTF and SK-LG.

Communication companies set the plan to invest on VAN companies and reinvest the commission from card companies, so to dominate credit payment network.

Kim Sung-hun, team leader of KTF M Finace, commented “if this trend continues, network shop should prepare two payment system; one for 011,019 (SK-LG) and another for 016, 018 (KTF)”

In case of Moneca card made by SK Telecom, Samsung, LG card, Hana Bank, etc, finance company pay commission of 1.1% of transaction to SK Telecom. It is very exceptional compared to existing commission of 0.2-0.3%. It reflects the initiative declines toward communication companies.

Recently, when SK Telecom invites network card companies for M commerce service, it demands shocking commission rate of 2.1%. Card companies comment “some companies will accept this proposals because the initiative has already declined toward to communication companies”

▽ Are card companies periphery?= With anxiety some card companies try to seek for a common response method. Ministry of Information and Communication intervenes lately to prevent excessive investment, and technical committee composed of communication card and academics opened three times from the end of August. However, the insistence of communication companies of “the technological standard is different” is not compromised.

She Won-jang, senior officer of Products Development of Koomin Bank commented “if there is no compromise between communication companies and between card companies, M commerce can be ‘Citiphone’ in worst scenario”

At the present, the number of users of M commerce is about 10,000 and that of shops with the system is about 20,000. To be used like credit card conveniently, the number of M commerce shops should be more than 2million.

Seong-Yub Ra cpu@donga.com