SK Telecom (SKT) and five major providers of credit cards announced the formation of a world-leading alliance to enter the Mobile Commerce (MC) Card business today. The alliance will be comprised of SK Telecom, Hana Bank, Korea Exchange Bank, KorAm Bank, LG Capital and Samsung Card.
The MC Card is an IC-based multi-purpose card offering a secure transaction environment and more storage capacity than the existing magnetic strip cards. Furthermore, the MC Card, together with the card slot handsets to be introduced in 3Q01, will make secure mobile commerce possible. In addition to the credit card and electronic cash (e-cash) functionality, by virtue of its greater data storage capacity, the MC Card allows for the provision of various services.
The MC Card is SK Telecom’s initial foray into the financial enabler business. With its ability to offer ‘one-stop’ transaction billing in a mobile environment, the MC Card gives SK Telecom a leading role in the development of financial enabler businesses and greatly expands the company’s direct reach to on-line and off-line businesses.
SK Telecom plans to quickly expand MC Card functionality to encompass SK Telecom 011 and TTL membership cards, OK Cashbag cards and public transportation cards. In the future, the Company plans to add additional features to the MC Card so that it can be used as an ID card and medical card, and as a medium to effect complex m-commerce transactions as banking and stock trading.
The MC Card creates new revenue sources for SK Telecom. The credit card companies will pay SK Telecom (i) a fixed fee for each new customer who signs up for a card and (ii) a share of the commission based on card billings. Since the credit card companies bill the subscribers for conventional credit card charges and mobile transactions, SK Telecom does not assume any credit risk.
By creating a business which creatively cross sells telecommunications and financial services, the launch of the MC Card business is a win-win strategy for both SK Telecom and its partners. The credit card companies access SK Telecom’s extensive retail network and large, high-creditworthy subscriber base to increase card memberships. They also strengthen their market stature by joining with SK Telecom to provide a new IC-based card services in the emerging m-commerce sector.
By taking a pioneering role in the financial enabler business, SK Telecom continues to pursue its strategy of growth through leadership. The MC Card leverages brand equity to effectively keep marketing expenses in check, allowing SK Telecom to: (i) lock in existing customers, (ii) create new subscribers, (iii) establish a new, forward-looking revenue source, (iv) bolster demand for m-commerce and wireless Internet content by providing a secure, handset-based solution, (v) drive 2.5G handset upgrades, and (vi) increase data usage over its 2.5G network. Furthermore, the customer information collected will form an important database for developing other financial enabler businesses.
The MC Card represents a very exciting first step for the Company in its financial enabler business. Along with the alliance with the credit card companies, it marks the start of the advent of next era of commerce in Korea, m-commerce, and SK Telecom is leading the way.
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