Viva Republica launches Toss payment gateway service
Toss operator Viva Republica has released its own payment gateway, allowing subscribers to make purchases online using its app.
A payment gateway authorizes credit card and direct payments for e-commerce sites and online retailers.
Viva Republica took over mobile operator LG U+'s payment gateway under a stock purchase agreement in December to establish its own service, Toss Payment. The division sold for 365 billion won.
With the acquisition, Toss Payment is likely to have the upper hand in the local payment services market. While more than 110 companies operate payment gateways, the top three companies dominate more than 60 percent of the local market share, one of which was LG U+.
Toss Payment will now become the second-largest payment gateway operator in Korea by market size, along with NHN KCP and KG Inicis. It gained more than 80,000 partner companies from the LG U+ division acquisition.
Toss Payment is also offering benefits to new partners, especially focusing on small businesses.
The company plans to shorten the time it takes for businesses to receive payments made through its gateway to two business days, increasing the cash flow for smaller businesses. Currently, it takes on average seven business days to settle payments.
New partners will be exempted from membership fees and can sign up for insurance policies on Toss for free. The company also hinted at plans to come up with “different services” including better sales analysis and promotional events for partner companies.
It also claims Toss’s gateway is much simpler than that of its competitors, and partner companies will only need a day to set up the service, far shorter than the industry average of two weeks.
“In other countries, payment gateway services offered by financial tech companies are rapidly innovating the market,” said Kim Min-pyo, the newly appointed CEO of Toss Payment. “Utilizing our technology and expertise, we will give the electronic payment industry a boost and set an example for other service providers.”
Transactions made through payment gateways are increasing every year. According to statistics from the Bank of Korea (BOK) in March, the daily average number of transactions increased by 39.3 percent and volume by 26.2 percent in 2019 compared to a year earlier
The coronavirus pandemic has also expanded the market for such services, as more people purchase goods online to avoid human contact. In fact, one of the market leaders, KG Inicis, recorded 4.6 billion won ($3.85 million) in net profit for the first quarter, a 21-percent increase compared to the same period last year. NHN KCP also saw its net profit increase by 63.6 percent to 7.2 billion won in the first quarter.
Toss expects Korea’s payment gateway market to grow to 525 trillion won in transaction volume by 2022, backed by an already flourishing e-commerce business.
With more people accustomed to mobile payment methods, some companies are starting to venture outside the online space into the offline world. NHN KCP recently launched Payco Order, where customers can order food and make payments using its mobile payment service Payco.
"Simple payment services are entering the O2O [online-to-offline] market and knocking down the wall that used to separate the two worlds," said Kim In-pil, an analyst at Cape Investment & Securities.
"Payment gateway services will start leading market growth as service operators start to expand businesses offline."
BY KANG JAE-EUN [firstname.lastname@example.org]