Online Payments

 

As the Korean online payment market is rapidly expanding, an increasing number of people are saying that it is urgent to build a platform shared by card companies. 

When online payment service providers or foreign IT companies are leading the local online payment market, problems related to fees and security can arise. Therefore, the construction of a joint online payment platform has been suggested, based on existing risk-management and security systems of card companies. 

The Credit Finance Association of Korea (CREFIA) announced the results of its review of reasons for a change in the market environment in line with the expansion of online payment services at a seminar held for journalists in Chuncheon, Gangwon Province in Sept. 26. 

“After standards of online payment service providers in eligibility for retaining credit information are set, services are expected to expand, mainly with large open markets and top online payment service providers, which can afford to invest in the establishment of a security management system,” said Lee Hyo-chan, head of the research center of the credit card headquarters at CREFIA, at the seminar.  

Lee worried that large foreign online payment service providers such as Alipay or PayPal, which already have the economy of scale in the overseas market, may eat away at the local online payment market if they enter the market by touting low fees. According to CREFIA, the range of fees demanded by foreign firms through a contract with a local shopping mall is estimated from 2.36 to 3.97 percent. Currently, local shopping malls pay 3.4 to 4.0 percent fees to local online payment service providers.

He added that when large IT companies with a large number of users and platforms such as Google and Apple penetrate the local financial industry, financial authorities need to thoroughly check whether or not these firms have risk-management capabilities that can operate a financial business.

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