Korean credit card firms accuse Google of discrimination
[THE INVESTOR] Android Pay’s debut in Korea has been delayed to early next year, after local credit card issuers refused to sign on, citing “poisonous clauses” in a potential agreement drawn up by Google, industry watchers said on Sept.11.
Google is reportedly forcing the credit card firms to share costs for promoting Android Pay in Korea as a part of a non-disclosure agreement. This would cost them millions of dollars every year. The US tech giant has also asked the Korean firms to bear the costs of expanding NFC terminals.
“Google has asked us to accept many unfair conditions, since Android Pay is the global standard,” one source told media on the condition of anonymity.
He added that the agreement clauses are Korea-specific, as in other countries Google shoulders most marketing expenses, and even hands out paybacks to credit card companies for their cooperation.
“There is no reason for Korean credit card firms to accept the terms when systems such as Samsung Pay and LG Pay are already available here, not to mention that Android Pay is a fairly restricted system,” said another source.
Google’s payment system requires security tokenization by Mastercard and Visa. These are paid services, and local credit companies will have to pay up. The global payments firms have offered an exemption in initial tokenization services, but credit card firms expect this to change as soon as transaction volume increases.
This is not the first time the adoption of Android Pay has been delayed due to a discord between Google and the local credit card firms. Originally, Android Pay was scheduled to be introduced within this year.
Google Korea declined to comment.
By Park Ga-young (firstname.lastname@example.org)