Doesn’t Anyone Want Android Pay? LG Doesn’t…

by Tim Sloane 0

This article in ETNews reports LG will compete with Google using its own payment app Gpay, establishing a second competitor to Android Pay alongside Samsung Pay. This new entrant is identified through a trademark application for ‘GPAY’ with the US Trademark and Patent Office:

“Following Samsung Electronics, LG Electronics is also entering global mobile payment market. Not only is it entering South Korean market, it is also planning to give shape to its plan to enter the U.S. market where many foreign mobile payment businesses are fiercely competing against each other.

According to IT industry and financial industry, LG Electronics just finished applying for trademark of ‘G Pay’ in the U.S. at the end of September after it did so in South Korea. It is a similar movement as Samsung Electronics as it applied for trademark of Samsung Pay in the U.S. in March before it was released.

Earlier LG Electronics applied for trademark (Number 4020130025494) of ‘G PAY’ at Korean Intellectual Property Office to enter into mobile payment market. Although it can use different brand after its official release hereafter, industries are accepting that an application of ‘Pay’ brand means that LG Electronics is declaring to enter into mobile payment market.”

The article identifies this market as worth ‘hundreds of billion dollars’, but fails to point out that the mobile wallet provider will get little, if any, of that dollar volume and that the work required to address regulatory and certification efforts will impose a steep cost:

“Fact that it applied for trademark in the U.S. indicates that LG Electronics will start its business in mobile payment market, which is worth hundreds of billion dollars, targeting the world.
It has been contacting South Korean financial businesses starting from early 2015 and it has been analyzing its competitors’ payment platforms while sharing information about mobile payment market with couple card businesses including BC Card at the same time.”

The article goes on to describe past payment efforts by LG and current research and planning efforts:

“LG Electronics also worked on pilot-type business to enter into mobile payment market. It once entered pilot-type mobile payment business by installing NFC charging payment function into its Smart Watch ‘Watch Urbane 48’. It installed transportation card function by cooperating with South Korean prepaid brand ‘Cashbee’ and is servicing it at many affiliated stores in South Korea. This indicates that it is planning to enter payment settlement market in the future.

It is also known that it has started developing fingerprint recognition solution to install Android Pay. Android Pay is one of mobile payment standards that is installed into recent Android OS’ Android M’. LG Electronics is applying personal authentication method through fingerprint recognition and is developing fingerprint authentication technology with few of companies that LG is working with.

As LG Electronics joins mobile payment market following Apple, Google, and Samsung Electronics, it seems that strong camps based on manufacturers will be formed.

Most people believe that LG Electronics’ mobile payment solution, which focuses more on ‘second-tier strategy’ than early preoccupancy of markets, will have wider payment range and be more versatile than current Samsung Pay. Industries are putting more importance in USIM-based payment system including NFC technologies rather than Samsung Pay’s MST416 method.

“A possibility of accepting global technologies just like Samsung Electronics and Loop Pay cannot be ignored. It will probably choose versatile mobile payment technologies that allow IC Chips to be linked to G Pay.” said one high-ranked person in a card company.

“LG cannot give any definite details since it is in the process of developing payment system. It is heard that LG is working hard to secure versatility that surpasses current mobile payment methods.” said a person that is familiar with LG Electronics.”

The cost associated with maintaining contractual relationships with all the major payment networks, enabling the secure provisioning of the payment credential, and maintaining the payment app’s compliance with network rules across multiple device platforms will limit how many different mobile payment apps can enter the US market and it is unclear if LG can sustain this effort.

Overview by Tim Sloane, VP, Payment Innovation at Mercator Advisory Group

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