Due to Security Certificate System: Online Trade Deficit Exceeds 1 Trillion Won Every Year for 5 Consecutive Years | BusinessKorea

Tuesday, October 17, 2017

Korea’s online trade deficits comes from the inconvenient and complicated payment system.
Korea’s online trade deficits comes from the inconvenient and complicated payment system.
SEOUL,KOREA
28 September 2017 - 4:30pm
Yoon Yung Sil

Although an increasing number of domestic consumers are making purchases on overseas online retail platforms (“direct purchases”), foreign consumers still show an insignificant number of direct purchases on domestic platforms (“reverse direct purchases”). This is largely interpreted due to the payment system at domestic online shopping malls which are still inconvenient and complicated though the Korean government has declared to abolish ActiveX and security certificate systems.

After analyzing the data submitted by Korea Customs Service, Shin Yong Hyun, a law maker and member at the Science, ICT, Broadcasting, and Communications Committee of National Assembly said on September 27 that annual trade deficits for overseas direct purchasing (ODP) have exceeded US$1 billion (1 .13 trillion won) in the past five years since 2013.

The total amount purchased by South Korean consumers was 20 times higher than that of foreign consumers’ purchases of South Korean goods. The amount of ODP reached at US$1.04 billion (1.19 trillion won) in 2013, US$1.54 billion (1.76 trillion won) in 2014, US$1.52 billion (1.74 trillion won) in 2015, US$1.63 billion (1.87 trillion won) in 2016 and US$1.3 billion (1.48 trillion won) as of the end of August this year, totaling US$7.04 billion (8.04 trillion won).

The total amount of reverse ODP was only US$354.02 million (404.29 billion won) over the same period. The figure stood at US$23.96 million (27.36 billion won) in 2013, US$36.82 million (42.05 billion won) in 2014, US$100.63 million (114.92 billion won) in 2015, US$128.86 million (147.16 billion won) in 2016 and US$63.74 million (72.79 billion won) as of the end of August this year.

Accordingly, the yearly trade deficits for ODP increased by 1.5 times from US$1 billion (1.14 trillion won) in 2013 to US$1.5 billion (1.71 trillion won) last year. The total number of ODP reached 74.61 million, which was 28 times higher than that of reverse ODP with 2.69 million in the past five years.

The trade deficit stems from the imbalance between South Korean consumers purchasing foreign goods and foreign consumers purchasing Korean goods and this is largely due to complicated payment systems of South Korean retail websites. The government is seeking to simplify payment systems after abolishing ActiveX and security certificates but the actual shopping environment hasn’t changed.

An official from Shin’s office said, “Unlike foreign websites where purchases can be made right away with only a credit card, in our country purchasing channels of online payment, certification systems and web standards of web browsers are complicated, which is why access by foreign customers is infrequent.”

Shin said, “Major foreign countries are activating e-commerce to respond to the rapidly growing online trade. Our government should also come up with proper systems that meets the international standards, including the simplification of payment systems, in order to increase reverse ODP.”

 

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