LG Pay 'White Card': History Repeating Itself? (Think Stratos, Coin, ...)

Despite efforts to keep their new product or service announcement secret until launch, big companies sometimes fail to control the power of the web when information leaks through a weak link. The most recent player to face this situation is LG, whose possibly to-be-launched product's images and speculation about functionality spread on the Internet at the speed of light. First reported by an Korean IT news website, LG is rumored to be ready with its LG Pay ‘White Card’, which looks like a chip-enabled electronic device in the form of a credit or debit card.

In November 2015, LG Electronics said that it had signed an agreement to develop its own mobile payment service called LG Pay. LG, which signed the agreement with South Korea’s largest and second-largest credit card firms Shinhan Card Co Ltd and KB Kookmin Card Co Ltd, did not give a timetable or description of its planned technology at that time. However, according to the new information that has leaked about ‘White Card’, LG had recently pre-ordered about 50,000 White Cards for ‘White Card’s’ release and is currently in discussions about mass-production of the ‘White Card’ with a South Korean Smart Card business.

The payments solution by LG is expected to be slightly different from the ones its rivals are offering. Published images give an impression that the card is a hybrid between a mobile wallet and a physical payment card. The product named ‘White Card’ seems to be very similar to another hybrid card we have seen before – Stratos (and of course other similar attempts such as Coin, Dynamics, etc.).

The LTP team had an opportunity to meet the Stratos team at Plug and Play Expo in Silicon Valley last year, when the company presented its universal card. Unfortunately, after a few months, Stratos CEO Tiago Olson shared with the LTP team that due to challenges with ongoing company financing, Stratos has paused and is undergoing restructuring.

Similar to Stratos card, LG’s ‘White Card’ images contains certain elements that could mean the card is an electronic device able to hold multiple cards, which the user will probably be able to switch between by pressing the arrows or through mobile.

The card’s exterior has another element that traditional cards don’t have – an LCD display that indicates the card is loaded and locked. As the ‘White Card’ is an electronic device, it has a battery life, which is also indicated on the screen. The golden pins will serve as a charging port (the 2 round ones closest to the edge), as well as potentially supporting chip card EMV technology (the 6 oval shaped ones). The ‘White Card Charger’ is reported to be introduced along with the card launch.

The card is reported to be launched at MWC 2016 next month and to work as a regular card at retailers and ATMs allowing users to withdraw funds from either of the connected cards. Upon launch, the ‘White Card’ is expected to support only magstripe transactions with chip-based payments reported to be later.

The Korean source suggests that the hybrid objective, among other things, is a financial inclusion attempt for the elderly who are not savvy with smartphones. Another group that is expected to benefit from the card could include people who tend to spend more money than the average consumer.

The mobile payments market is getting crowded as smartphone makers like Apple and Samsung have launched their own mobile payment services. We had talked about LG’s interests in the payments space earlier and with this new announcement it seems like LG is trying to squeeze into the payments space through a solution that has not seen a major success before. Even well-funded Coin has had to redefine itself with its latest partnership with MasterCard, seemingly moving away from the original electronic card idea.

Although with different technologies, everything that Apple Pay, Samsung Pay, Chase Pay and other ‘Pay’s are really looking to offer is just another payments solution. Universal cards haven’t seen market success before. However, in case LG actually launches a polished technology, there is a chance it can pioneer in a new market. There is an interesting detail about the LG Pay ‘White Card’ that could give the product an edge in terms of network expansion. The solution will allow card companies to directly manage transactions and information on the card, bypassing LG's servers, as reported by the sources. With rivals like Apple and Samsung taking a slice from transaction fees, LG Pay may end up as a more financially attractive service to implement and promote, whereby if there is indeed wide adoption, banks will not have to share their profits from transactions.