Tuesday , November 19, 2019

UPDATED: As LG Pay Makes Its (Belated) U.S. Debut, Observers Question Its Likely Impact

Add LG Pay to the multitude of U.S. mobile-payment options. LG Electronics USA announced Tuesday the mobile-payment service is available on select LG smart phones. The move comes a year later than LG initially said it would. LG Electronics Inc., the parent company of LG Electronics USA, introduced LG Pay three years ago in Korea.

LG Pay is not much different from its Apple Pay, Android Pay, and Samsung Pay competitors. Consumers can store their card data in the payment app and make payments at the point of sale using near-field communication connectivity.

LG Pay, like Samsung Pay, also can make payments using a wireless magnetic-stripe connection, which LG calls wireless magnetic communications. LG says it licensed the magstripe wireless technology from Dynamics Inc., a Pittsburgh-based developer.

LG Pay transactions also can be made using LG PayQuick, a technology that includes the ability to swipe up from the bottom of the phone screen to make a payment.

“LG Pay, like all of our offerings, further connects our customers beyond the smartphone to features that enhance their daily lives,” an LG spokesperson says in an email. “LG Pay has broad appeal to a range of consumers looking for an intuitive, easy-to-use mobile payments solution.”

Credit and debit cards from Chase, PNC Bank, Regions Bank, State Employees’ Credit Union, U.S. Bank, and Virginia Credit Union are eligible to be used with LG Pay. Others are expected later this year.

Like the other mobile-payment services, LG Pay offers more than payments. It incorporates digital gift card technology from Swych, for example, that enables users to buy and send retailer and restaurant gift cards within the app. Recipients can switch value from one retailer to another without losing any of it. LG Pay also has an offers component.

LG Pay is only available on the LG G8 ThinQ phone now and on four more devices in coming months. It is only available on the Google Play store.

That limited availability may hinder adoption. “It will only work on one specific LG phone at this time and since their total U.S. market share is only about 11 percent, the offering is available to a very small group of customers,” says Thad Peterson, senior analyst at Boston-based Aite Group. “Even if it was available on 100% of their devices, overall market penetration will be small. Unlike Apple Pay and Google Pay, LG Pay will not be able to provide a native in-app payment capability for IOS or Android apps as Apple Pay and Google Pay can.”

The expectation, it appears, is that LG will benefit from further reach into its customers’ lives, says Krista Tedder, director of payments at Pleasanton, Calif.-based Javelin Strategy & Research.

“The launch of LG Pay in South Korea in 2017 was a move into the digital-first culture of the Asia Pacific region,” Tedder says. “The consumer benefits of having a mobile wallet for payments is for in-person, in-app, and browser-based purchases. It is a way to consolidate payment methods into one consistent and secure method.”

It is also uncertain whether the addition of another mobile-payments service aids the broader acceptance of the tech.

“While LG Pay will increase the visibility of mobile wallets and increase the size of the total addressable market for mobile wallets, it also adds complexity and potential confusion to the space,” Peterson says in an email. “It’s a toss-up as to whether this will increase the total number of mobile wallets being used in the U.S. or slow adoption by adding more noise.”

Tedder says the timing of the launch is “more of a challenge in gaining issuer adoption. The slow growth of Apple Pay and Google Pay have made issuers hesitant at launching another mobile payment method. Approximately 20% of US consumers use mobile wallets at merchant point of sale each month.”

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