Samsung Electronics, Naver partner to create simple payment service

Samsung Electronics Co. and South Korea's Naver Financial have formed a simple payment service alliance in which users of Samsung Pay can make simple payments at 550,000 online merchants on Naver, the country's leading web portal.

Naver Pay, which has few offline stores accepting it, can now be used like Samsung Pay for credit card transactions using a Galaxy smartphone.

Ahead of the launch in South Korea of Apple Pay, the contactless simple payment service of the American tech giant, domestic powers in online and offline simple payment services have joined forces. Apple Pay's forthcoming entry has caused a seismic shift in the structures of the domestic smartphone and pay markets.

Samsung Electronics and Naver Financial on Monday said they signed a business agreement to begin their collaboration in digital payment and wallets.

An industry source familiar with the matter said, “Samsung Electronics' intent to respond to Apple's bid to reinforce its domestic iPhone ecosystem led by Apple Pay matches Naver Pay's desire to expand its offline payment network.”

Though it has 31.5 million subscribers, Naver Pay is inconvenient to use in offline payments. Though the web portal Naver's 550,000 online merchants accept it, the app can be used at merely 100,000 offline places and only with a quick response (QR) or barcode.

Through this collaboration with Samsung Pay, however, Naver Pay users can make simple credit card payments with a Galaxy smartphone like with Samsung Pay at all merchants nationwide.

Both companies are also known to be considering a system to allow direct payments using a Galaxy smartphone without opening the Naver Pay app.

A source from the digital payment sector said, "The integration of Naver Pay's discounts and point accumulation benefits and Samsung Pay's easy usability will have a major effect on raising market share."

This is the first time for Samsung Pay to partner up with a financial company other than Samsung Card, a Samsung Group affiliate. With Apple Pay set to launch domestically as early as next month, analysts say Samsung Electronics is aggressively seeking to maintain its dominance on the domestic pay market.

Apple Pay is the world's top simple payment service with over 200 million users but has been absent in South Korea, where Samsung Pay has operated for 10 years. This has also resulted in a share gap on the smartphone market.

"It's clearly obvious that the launch of Apple Pay can boost the number of iPhone users," an industry source said. "Samsung Electronics can effectively respond to this by first boosting Samsung Pay's versatility."

Write to Nan-Sae Bin at binthere@hankyung.com