South Korean tech giants Samsung Electronics and Kakao are expected to muscle into the domestic mobile payment market, which has long been dominated by financial companies, industry sources said.

A recent media report said that Samsung Electronics was exploring the business potential in cooperation with local retail companies.

Shares of related companies including Korea Cyber Payment, Korea Information & Communications, and Danal all rose on Friday, following the media report.

Samsung Electronics’ spokesperson denied the report, saying, “We are not working on direct mobile payment systems.”

Kakao is more proactive than Samsung in tapping the mobile payment market. The nation’s top mobile messenger service provider has already unveiled its plan on its mobile payment system early this year. The system is expected to be launched in the second half of this year in partnership with 15 local banks.

“Through the system, users can put up to 500,000 won ($490) in Kakao’s account and can send the money to their friends or buy goods displayed on Kakao stores,” the company’s spokesperson said.

Industry watchers said the mobile payment business can be a new income source for IT companies.

“It will be an attractive market for tech companies as the money transaction through mobile devices can enable them to complete a mobile eco-system through the business.

“To be successful, it will be important for tech giants to form partnerships with retail and financial companies on a large scale,” said Kim Joon-sub, an analyst at E-Trade Investment and Securities.

“As the competition becomes fiercer with more players, it will be important for tech companies to lead the market with more convenient services,” said Jin Seung-hun, head of the Electronics and Telecommunications Research Institute’s cybersecurity research team.

The global mobile payment market is a high-growth market, expected to reach $720 billion in 2017, from $235 billion in 2013, according to a study by research firm Gartner.

By Shin Ji-hye (shinjh@heraldcorp.com)