The rise of mobile payments in South KoreaAmid this trend, the use of mobile payment services has surged in South Korea in recent years. The average daily value of mobile payment transactions has increased around sevenfold since 2016. Also known as "easy payment services", mobile payment services in South Korea allow customers to make payments via smartphones using previously stored credit or debit card data. Users register their cards with the mobile payment service provider, which enables them to make online and offline payments using just a passcode or fingerprint scan, bypassing the complicated authentication process previously required. Mobile payment methods using electronic currency generated by loading a prepaid value onto the provider's service platform have also become increasingly popular.
Leading mobile payment providersThe mobile payment market in South Korea is dominated by large non-bank technology companies such as Kakao, Naver, Toss, and Samsung Electronics, which launched their services in 2014 and 2015. Kakao Pay and Naver Pay are currently the most widely used services, the popularity of which is mainly due to the convenience of use. The currently planned revision of the Electronic Financial Transaction Act in South Korea, which allows technology and fintech companies to offer certain financial services, will ultimately lower the barriers for new players to enter the payments market.
The rising market share of fintech companies has already put banks and card companies under enormous pressure. To counteract these challenges, banks and financial institutions have taken various measures to adapt and expand their payment services to meet the growing needs of customers. How this competition will affect the future of the payments market and drive further innovation are some of the interesting aspects of South Korea’s move toward a cashless society.