A new report from financial services analysts Celent forecasts that the mobile contactless payments market in South Korea is set to grow at an average compound annual growth rate of some 50%.

Mobile Contactless Payments in South Korea: A Recipe for Future Success? provides an analysis of trends and prospects for the country’s mobile contactless payments market, looks at the product line-ups that are driving the market and at the issues looming on the horizon that market participants will have to face.

“Years of work to pioneer the market are finally beginning to translate into growth,” says Celent. “Since around 2009, the mobile contactless payments market has surged to life with mobile carriers and Korea Smart Card Co collaborating to aggressively roll out the Mobile T-Money service.

Growth of the mobile contactless market in South Korea hinges on a number of factors, says Celent, including increased penetration of mobile phones with RF antennas, the spread of mobile contactless payment processing terminals, and new services that differentiate this payment method from conventional cards, and synergies through interoperability.

“While the country has yet to clear these hurdles to growth, 2010 has seen a number of new services announced, and it is clear that the mobile contactless payments market is continuing to evolve,” says KyongSun Kong, the author of the report.

In July, Korean mobile network operator SK Telecom signed a memorandum of understanding with Japanese operators KDDI and Softbank Mobile that will see the three companies working together to switch from their existing non-NFC standard mobile contactless services to an NFC standard approach. Rival Korean operator KT, meanwhile, is now expected to begin the switch to NFC standard technology as soon as next month.

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