With more consumers willing to make purchases using smartphones, the nation’s top two search giants -- Naver and Daum Kakao -- are rushing to take the lead in the mobile payments market. 

Naver, the No. 1 search engine with more than 22 million mobile users, is set to unveil its new mobile payments app Naver Pay on Thursday, aiming to keep users within its website throughout the whole shopping process.

With a single Naver ID, consumers can search and pay for the products, all the way through the check out and delivery process. Naver points are also offered for future purchases. Money transfers are available as well.

Aimed at taking advantage of the company’s strong user base, some 50,000 online and offline merchants have signed up to join the service.

Daum Kakao entered the market first last year with its Kakao Pay that runs on its popular mobile messenger app KakaoTalk. Its membership now exceeds the 40 million mark, having launched in September.

Daum Kakao has expanded the service areas. It has partnered with local governments to allow users to pay electricity charges and other taxes using Kakao Pay. 

“While Naver is focusing on what it can do best, Daum Kakao is seeking diverse ways to expand the service,” said an industry source.

“Daum Kakao has also created a task force to enter the banking business in the long term.”

While these two services are focused on the Korean market only, Samsung Electronics, the world’s largest smartphone maker, is preparing for the global launch of its Samsung Pay in September.

Unlike Apple and Google -- the two big players relying on Near-Field Communication technology only -- Samsung plans to allow payment through the magnetic strip used in older readers for better and wider use of the service.

Samsung Pay could pose a threat especially to Google as they both offer services based on the Android operating system. Samsung plans to launch the service together with its new Galaxy Note 5 phablet in September.

About possible competition with Google, Lee In-jong, senior vice president of Samsung’s mobile business division, said earlier this month: “We don’t want to compete against Google, one of our most important partners. We would seek synergies.”

Despite the rise of mobile payments, cash and credit cards are still considered easier to use and are more widely accepted. Still, the mobile wallet is more of a supplementary service than a replacement.

But industry watchers agree the market is growing quickly.

According to market research firm Gartner, the global mobile payments market is expected to balloon to 800 trillion won ($720 billion) by 2017, compared to this year’s estimated 520 trillion won.

In Korea alone, mobile payments were a 13-trillion-won market in 2014, more than doubling from 5.9 trillion won in 2013.

Considering the market potential, companies are focusing more on elevating consumer awareness than short-term profits in the early stages. Samsung and Naver are also reportedly not charging additional fees to credit card companies for the fast filtration of their services.

In the meantime, foreign companies, especially Chinese firms, are pushing hard to share the lucrative Korean mobile payments market.

China’s largest Internet portal Tencent recently started the offline service of Wechat Pay at some stores and duty-free shops. Alibaba is also working on the Korean version of its extremely popular Alipay.

“Alibaba and Tencent are likely to appeal to Chinese travelers first. During their adjustment period, Korean firms need to strengthen their readiness with more streamlined services,” an official from a local search engine said on condition of anonymity. 

By Lee Ji-yoon (jylee@heraldcorp.com)