Payment app could end plastic’s reign

Home > Business > Finance

print dictionary print

Payment app could end plastic’s reign

A new payment system will be unveiled this year that allows customers to purchase goods using a smartphone app, or by answering a simple call, in a bid to minimize what is seen as an over-reliance on credit cards, sources at the Financial Services Commission (FSC) said yesterday.

When shoppers type their account number and pass code into their phone, a barcode will appear. They then show this to the cashier who scans it to authorize the payment, which will automatically be deducted from their savings account, the financial regulator said.

The second method is dependent on the retailer having an automated response system (ARS), device. The consumer must also first sign up with a Web site that provides this service and register their bank account number and pass code.

Under this system, which does not require the use of a smartphone, the cashier punches the shopper’s phone number into the ARS device, which prompts an automatic call seeking authorization from the purchaser.

“All the necessary technologies to run the new service are ready,” said an official at the FSC. “We hope it will be available after a related law is revised on Nov. 6.”

To curb the risk of theft and attacks by hackers, the FSC may initially set a daily transaction limit of 300,000 won ($269), but the official said the financial regulator is still deliberating on the matter as e-finance firms have requested the ceiling be set at 500,000 won.

The FSC and market observers said the new service could ultimately force credit card issuers to lower their transaction fees if it proves successful.

“The fees for using the service may be lower than the 1.5 percent that credit card firms charge large discount stores because the operating costs are lower,” said an industry source. “It will also curb rampant spending because consumers can only spend what is in their account.”

According to the FSC, credit card usage accounts for 41 percent of per-capita GDP in Korea, compared to 15.2 percent in the U.S. and 8.1 percent in England.

By Kim Mi-ju [mijukim@joongang.co.kr]

More in Finance

Kospi hits midday high, closes down on profit-taking

Naver Financial launches advice service for entrepreneurs

[NEWS ANALYSIS] As foreigners rush back, market does an about-face

CU gets into the foreign exchange transaction business

Kospi hits another record high despite Covid spike

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now