Maybe credit card readers would soon disappear from shops and restaurants thanks to a phone-to-phone payment solution called Pay App that allows its users to send and receive payment using near field communication (NFC)-enabled smartphones.

According to Hankook NFC Co., a South Korean mobile payment and financial solution developing startup that recently started providing the Pay App solution, with its new mobile payment system, a customer and a merchant just need to place their NFC-enabled smartphones close together to make payments because the payment solution uses NFC technology that enables wireless data transfer. NFC is widely used in the transport sector as contactless fare cards on buses and subways, and most smartphones come with NFC as a basic feature.

The company expects Pay App can be an alternative to an expensive card reader, especially benefitting small merchants more by allowing them to save purchase and maintenance costs for a card reader. Hwang Seung-ik, chief executive of Hankook NFC, said that compared to a portable card reader that costs 500,000 won ($440.5) per device and requires a separate monthly payment fee of 30,000 won, Pay App costs nothing extra for merchants. This is why the number of subscribers to the service has been on the steady rise since its launch, Hwang added.

The company is currently seeking to introduce Pay App in Japan where Apple Inc.’s iPhones are popular among smartphone users. In partnership with Miroku Jyoho Service Co. (MJS), a major financial and accounting system developer in Japan that has invested 3 billion won in Hankook NFC, the Korean startup plans to launch the phone-to-phone payment module specifically tailored for Apple Pay in Japan in November.

Hwang said that despite its popularity, use of NFC-enabled Apple Pay has been low in Japan because only a limited number of merchants are fitted with NFC readers. But with Hankook NFC’s Apple Pay phone-to-phone module, transactions through Apple Pay would significantly grow because the system doesn’t require a separate NFC equipment, Hwang said.

By Oh Chan-jong

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]