11 Feb 2021
Posted in Banking
Mobile wallet payments in South Korea to surpass US$500bn in 2024, reveals GlobalData
South Korea is a well-developed payments market, with consumers preferring cashless payment. While credit cards are the mostly preferred payment method, mobile wallet payments transaction value is expected to reach KRW581.3 trillion (US$503.5bn) in 2024, according to GlobalData, a leading data and analytics company.
An analysis of GlobalData’s Payment Instrument Analytics reveals that the mobile wallet payments transaction value grew from KRW12.0 trillion (US$10.4bn) in 2016 to an estimated KRW209.7 trillion (US$181.6bn) in 2020.
Sowmya Kulkarni, Banking and Payments Analyst at GlobalData, comments: “South Koreans are well-accustomed to mobile wallets, with the country ranking one amongst the top globally, in terms of per capita spending using mobile wallets. High smartphone and Internet penetration, coupled with government’s push towards cashless transformation have supported this growth.”
The ongoing COVID-19 pandemic has further accelerated the adoption of mobile wallets in the country, as consumers are increasingly opting for payments through mobile wallets due to the fear of contracting virus through the usage of cash and cards.
To tap into this growing opportunity, tech firms, payment service providers and even mobile manufactures have launched varied mobile payment solutions. Kakao Pay is the most popular mobile wallet brand with a customer base of 34 million, followed by Samsung Pay, which has around 19 million customers. Other popular mobile wallet brands in the country are Toss, Naver Pay, L.pay and LG Pay
Growing adoption of QR based payments by merchants is also driving mobile wallet usage in South Korea. QR code-based payments are gaining traction in Asia, and this can be seen in South Korea as well supported by government, merchants, and mobile payment providers.
For instance, Seoul Metropolitan Government in collaboration with domestic banks offers Zero Pay, a QR based mobile payment solution for merchants. It enables small merchants with annual turnover below KRW800m ($0.69m) to accept mobile payment without any transaction fees.
Ms Sowmya concludes: “South Korea has a sophisticated and mature digital payments market. As cash usage continues to decline in the country, consumers will increasingly move towards mobile wallets for both online and in-store payments.”