Online payments pick up steam

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Online payments pick up steam


Online payment services, especially through mobile, are gaining more ground in Korea, according to the latest report from the Bank of Korea (BOK), which showed the number of transactions and amount of money transferred through online payment methods increased during the third quarter.

Data from the central bank showed that online payment transactions, whether they were on computers or mobile, averaged 21.17 million a day during the third quarter, an increase of 1.6 percent from the previous quarter. The transactions per day amounted to 363.1 billion won ($306 million), a 12.8 percent quarter-on-quarter rise.

“Payment gateway services [which facilitate financial transactions between merchants and customers by transferring information], led the way with more people using mobile payment services,” the bank said in its report released Monday.

Popular mobile payment services in Korea include Kakao Pay, Naver Pay and Samsung Pay. They allow users to save debit and credit cards on mobile apps and then pay for items with the tap of a phone.

Such payment methods have enjoyed a huge leap in popularity. From July to September, an average 1.01 million such transactions were made per day, a 41.7 percent increase from the previous quarter. That amounted to 29.5 billion won transacted per day, a 42.4 percent rise. The BOK said the number of payments made through such apps during the third quarter alone has already surpassed 2 percent of all debit and credit card usage in the first half of the year.

Remittances based on electronic prepayment platforms - wherein users can deposit their money in advance and then transfer the funds to other accounts to avoid cumbersome verification processes - were made 150,000 times a day on average. That made up 3.4 percent of all mobile banking transactions made during the quarter, the bank said. About 7.9 billion won was remitted.

“Retailers and manufacturing companies, who also take up a large portion of the pie in transactions that are not online, were the main beneficiaries of the trend,” the report said. “E-banking service providers [such as Toss and Kakao Money] also enjoyed higher growth than traditional financial companies in remittance service.”

With more money being transferred through mobile apps, many have raised concerns about greater security risks. The BOK, though, appears reassured about the security measures put in place by many banking service providers.

“Even though putting in credit card information on these apps was allowed, starting from last year, service providers have had to fulfill certain technological criteria before launching their services,” said Chae Kyu-hang, an official from the BOK’s payment and settlement systems department. “And with biometric verification technology developing, the perspectives for consumers are shifting for the better. As simplified as the authentication process has become, the technical aspects of security are progressing. We have not heard any cases of serious security threats yet.”

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