S.Korea announces major push to pay-by-phone services

SEOUL, June 13 (Reuters) - South Korea plans to install or upgrade 300,000 mobile payment checkouts at major retailers and transport services this year in its latest push in the potentially lucrative market as the likes of Google Inc and Apple Inc competitively introduce their own pay-by-phone services.

South Korea’s communications commission also said on Monday that it would require mobile phone vendors to equip all smartphones with near field communication (NFC) technology, which allows wireless data exchanges at short range, letting people pay for goods, store electronic tickets, collect coupons by swiping a cell phone at a checkout or scanning tags on movie posters.

So far, only two NFC-enabled handsets have been offered in South Korea -- Samsung’s Galaxy S II and Pantech’s Vega Racer -- and a lack of standardised settlement checkouts at retailers, and disagreements over fee-sharing structure and controlling customer information have prevented the industry from taking off.

The domestic smartphone market has exploding more than ten-fold to top 10 million handsets in just 18 months, or about a fifth of the population, but the mobile payment market, which some say could eventually replace credit and debit cards as the primary means of payment, has been slower to take off.

The commission said mobile operators and credit card firms had agreed to install or upgrade checkouts with NFC processing technology in retailers, fast food outlets, coffee chains and petrol stations, while card companies were offering discounts to customers using mobile payment services to promote the industry.

“Mobile payment technology has been available since early 2000 but it failed to take off for various reasons ... but today’s agreement is a small step toward mutual growth going forward,” the head of the Korea Communications Commission said in a statement.

The authorities expect the new initiative to boost NFC-enabled phones to more than 5 million units this year.

The global mobile settlement market is expected to grow to $1.1 trillion by 2014 and NFC-based technology is set to account for a third of the market, according to some industry experts.

Korean operators have moved into the credit card business -- SK Telecom Co Ltd is the top shareholder of unlisted Hana Card with a 49 percent stake and KT Corp owns BC Card, hoping combing their mobile businesses with virtual wallet technology to generate a new source of revenue.

In the United States, Google said last month that it had agreed with MasterCard Inc , Citigroup Inc , Sprint Nextel Corp and transaction processing company First Data to make a mobile payment system for commercial services this summer in New York and San Francisco through smartphones using its Android platform. (Reporting by Miyoung Kim; Editing by Chris Lewis)