Electronic transactions hit recordElectronic financial transactions surpassed 100 trillion won ($82.8 billion) last year for the first time, following the government’s strong deregulation initiatives to promote fintech.
According to the Financial Supervisory Service (FSS) on Monday, electronic financial transactions via various services such as electronic payments and clearings reached 109.8 trillion won last year, up 22.1 percent compared to a year before.
Of the 109.8 trillion won, payment gateway (PG) transactions accounted for the largest portion, 79.9 trillion won, up 24 percent compared to a year earlier. PG companies are agencies that send money or payment information from buyers to sellers.
Escrow agent companies were last year involved in transactions worth 19.3 trillion won, up 30.4 percent year-on-year, with growing concerns over financial scams in e-commerce. These companies guarantee transactions by holding buyers’ cash and paying it to sellers after products are sent to the buyer.
Fintech-enabled services, including pre-payment, debit payment services, and electronic bill payment services, remained relatively small, totaling 10.6 trillion won. However, the transactions via technology-enabled services grew sharper than conventional payment services.
Electronic debit payment services such as Yelo Pay, which live-transfers money from a user’s bank account at major commercial bank directly to a sellers’ account without fees, are new businesses with annual transaction worth 700 billion won last year. However, the market grew the sharpest by 133.3 percent compared to a year earlier.
Transactions via electronic pre-payment services like mobile vouchers and T-money bus cards, through which a user has transferred money in advance from the bank account and makes spending under the limit, grew 23.3 percent.
The transactions on electronic bill payment services on mobile apps shrunk 43 percent compared to a year earlier as users preferred using auto-payment systems offered at banks. The market is expected a turnaround this year as IT companies like Kakao are increasingly launching new utility bill payment services this year. NHN Entertainment is also known to be working with Payco, a mobile payment service operator, to provide a mobile payment service for utility fees.
As the electronic transaction increased, the number of new IT-oriented financial companies rose at the largest level in five years.
Some 32 new IT companies registered their financial businesses for licenses last year, up 28.5 percent compared to a year earlier. With the new companies, a total of 148 electronic financial companies registered as of the end of 2015. Of 32 new companies, 12 went into the PG business, followed by seven companies to the debit
payment and each of six companies to the pre-payment and bill payment
“The PG and electronic debit payment service markets are forecast to grow sharpest this year with more players joining the market,” said Jeong Ki-young, an FSS official. “Fintech start-ups and conventional financial companies will keep expanding in these sectors by lowering service fees.”
The FSS forecast that the government’s revision bill to lower minimum capital requirement on electronic payment gateway businesses will further heat up the competition among fintech companies in Korea. The bill gives business licenses to all electronic payment companies with capital of 300 million won or more, eased from the current minimum requirement of 500 million.
BY KIM JI-YOON [email@example.com]