Over the past year or two, Park Ji-yoon, a 28-year-old office worker in Seoul, has gradually stopped carrying her wallet when going to most places, be it a convenience store, a restaurant or a bar.

There is no need to do so, Park says, as she is an avid user of mobile payment services that allow her to make transactions using just her smartphone, both in the offline and online world.

“At offline retailers, I just have to activate my mobile pay service on my smartphone and place the device next to a card reader. When shopping online, I simply enter a passcode or scan my fingerprint to make a purchase. It’s super convenient,” Park said.

Park is just one of many South Koreans hailing the simplified mobile payments business, led by smartphone manufacturers like Samsung Electronics as well as internet platform providers like Naver and Kakao.

This year, around 31.9 percent of Korea’s smartphone users are expected to use their phones to pay for goods or services at a point of sale — the “cash register” where a retail transaction is completed — according to the January report by analytics firm eMarketer.


The growth of such proximity mobile payment services in the offline sector was spearheaded by the introduction of Samsung Pay in 2015, which has since expanded its reach to take a dominant position in Korea.

Reflecting the growth, Samsung Electronics said Monday that Samsung Pay had secured more than 10 million users and has also hosted 18 trillion won ($17.02 billion) in cumulative transactions in Korea as of March 2018, just 2 1/2 years since its introduction.

Samsung Pay allows users to pay by placing their smartphone — on which credit and debit cards can be registered — near a card reader. It leverages both near field communication and magnetic secure transmission technology to transmit payment information between the phone and payment terminal.

Samsung Pay, built into high-end Samsung smartphones and available for use on selected Android devices, is expected to retain its dominance in the mobile pay sector, at least in Korea.

Korea is widely perceived as a ripe market for Samsung Pay, since most people here use Samsung smartphones, with many opting to purchase premium models equipped with biometric authentication sensors that make the mobile payment process even simpler.


In the online realm, the mobile pay service competition is more dispersed among multiple players — most notably N Pay operated by Korea’s dominant portal website Naver and Kakao Pay provided by Kakao, the operator of the country’s top mobile messenger KakaoTalk.

Payco, operated by NHN Entertainment, has also been working to expand users, achieving growth particularly in the mobile game market, while local retailers with stakes in e-commerce have launched their own systems, including Shinsegae’s SSG Pay and Lotte’s L Pay.

Armed with a massive local user base, Naver has so far been leading the pack with N Pay. However, Kakao appears to be quickly catching up with aggressive marketing and partnerships.

Kakao said Monday that Kakao Pay’s transaction volume reached 1.3 trillion won in March this year, marking a whopping 900 percent growth from April 2017. The firm accredited this growth to the increase in the number of partnered stores from 2,500 to 12,600.

Another growth contributor was Kakao Pay’s introduction of a simplified money transfer service, launched in partnership with Korea’s major banks. It allows users to exchange money with other users with a few clicks via the KakaoTalk messenger.

Kakao plans to extend its presence to the offline realm starting next month by introducing a new pay system where users can use QR codes and barcodes generated on their smartphones to make payments at offline stores.

According to the “2017 Electronic Pay Service Usage” report released Tuesday by the Bank of Korea, 2.12 million won mobile payment transactions were made daily last year, up 147.4 percent on-year.

The total volume of payments facilitated by simplified mobile pay services reached a record 67.2 billion won, up 158.4 percent on-year, according to the BoK.

In addition, the proportion of offline payments in the overall simplified mobile pay realm has increased from 46.5 percent in 2016 to 55.6 percent in 2017, overtaking online payments.

By Sohn Ji-young (jys@heraldcorp.com)