Mobile wallet payments are becoming the ‘mainstream’ payment method in South Korea, gradually displacing traditional payments such as cash and cards, with nearly two-thirds of South Koreans using mobile wallets at shops, according to GlobalData, a leading data and analytics company.

According to GlobalData’s 2021 Financial Services Consumer Survey*, which was carried out in Q1 and Q2 2021, 62.7% of respondents indicated that they had a mobile wallet and used it at shops or stores while only less than 4% respondents indicated that they never heard about mobile wallets.

Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “South Koreans are well-accustomed to mobile wallets, with the country ranking among the leading markets globally in terms of per capita spending using mobile wallets. High smartphone and internet penetration coupled with the government’s push towards a cashless society have supported the growth.”

The COVID-19 pandemic further accelerated the adoption of mobile payments in the country, as consumers increasingly opted for contactless payments via mobile wallets due to fear of getting exposed to the virus through cash handling. Many retailers, restaurants, and public transport networks now accept payments via mobile wallets.

Many Asian countries, including South Korea, are emphasizing on QR code-based mobile payments to accelerate the shift towards electronic payments. The Seoul Metropolitan Government, in collaboration with domestic banks, offers Zero Pay, a QR based mobile payment solution, for merchants enabling smaller merchants with annual turnover below KRW800m ($0.7m) to accept mobile payments without any transaction fees.

To tap into this growing opportunity, tech firms, payment service providers, and mobile phone manufacturers have all been launching mobile payment solutions. KakaoPay leads the market with a customer base of 36 million. Other popular mobile wallet brands in the country include Samsung Pay, SK pay, L.pay and LG Pay.

While the mobile wallets market in South Korea is growing at a fast pace, some barriers still exist for its use. Of the survey respondents who did not use a mobile wallet last year, over 30% do not perceive mobile wallets to be better than cards or cash while nearly 22% are concerned about what would happen to their payment details if their phone were lost or stolen.

However, to drive the adoption among non-users, mobile wallet providers are imparting advanced security features. For instance, Samsung Pay uses tokenization and Samsung Knox (Samsung’s proprietary multi-layer security platform) to provide its users secured mobile payments.

Sharma concludes: “South Korea has a well-developed digital payments market. With consumers continuing to embrace cashless payments, mobile wallet payments are likely to grow further, supported by government initiatives, a large tech-savvy population, growing acceptance of QR code-based payments among merchants, and increasing preference for contactless payment methods.”

* GlobalData’s 2021 Financial Services Consumer Survey was carried out in Q1 and Q2 2021. Over 52,742 respondents aged 18+ were surveyed across 42 countries