South Korean retail giant Shinsegae Group said Friday it selected Viva Republica, the operator of Korean fintech unicorn Toss, as a preferred bidder to acquire the group's payment services.

The entire stake of Shinsegae's mobile payment businesses SSG Pay and Smile Pay are up for sale. The two are estimated to have subscribers of 9.5 million and 16 million, respectively.

Toss will conduct a due diligence on Shinsegae's SSG Pay and Smile Pay in July to have their legal and financial circumstances investigated ahead of the sellout.

Shinsegae Group will also carry out a due diligence on Toss next month as the retail conglemerate plans to receive a part of the sale price in the form of Toss stocks. The assessment aims at evaluating Toss' stock value, as it is a unlisted company.

The Shinsegae Group official said that most of the details including the sale price have yet to be determined. "However, we are aiming to wrap up the process (of selling SSG Pay and Smile Pay) by the end of this year," he added.

Shinsegae Group's SSG Pay and Smile Pay, which serve as online payment services for the group's online shopping platform SSG.com and Gmarket, respectively, along with a slew of brands retailed by Shinsegae Group such as Starbucks, have been struggling to find a buyer since they were put up for sale in the beginning of the year.

Industry watchers say the reason for the sellout largely centers around the services' dim outlooks for generating profits in the future, with large firms such as Kakao Pay, Samsung Pay, and Naver Pay dominating the market share for domestic payment services.

"A company's own payment services help 'lock in' loyal customers with its benefits. Also, services reduce the fees that have to be paid by the companies to payment service operators. Consumer data such as purchase patterns can be collected and analyzed with the payment services as well," an industry source said.

"However, companies have to pour in a lot of money to sustain a working payment system. With the saturated domestic market for it, it is likely that Shinsegae Group deemed that its own payment services will have a difficult time generating profits on its own," he added.

According to Hanwha Investment & Securities, the total amount of transactions made with online payment services in Korea logged 132 trillion won ($99.8 billion) during the first half of 2022.

Transactions made through Kakao Pay took up 42.4 percent of total transactions, followed by Naver Pay and Samsung Pay at 24 percent each.