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Kakao Pay Struggles to Increase Affiliated Stores due to Higher Fees
Slow Progress
Kakao Pay Struggles to Increase Affiliated Stores due to Higher Fees
  • By Jack H. Park
  • November 25, 2014, 02:41
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Kakao Pay, Kakao's simple payment service provided by LG CNS, is not rapidly expanding its affiliated stores, even with its partnerships with all of the card companies in the nation. Many people are saying that the untested payment volume and higher fees compared to other online payment service providers are major sticking points for the growth of the service.

According to industry sources on Nov. 24, GS Home Shopping is the only company that has introduced Kakao Pay, except for platforms such as Kakao Presenting and Kakao Pick on KakaoTalk.

Initially, LG CNS, an online payment service provider for Kakao Pay, was scheduled to launch Kakao Pay at GS Home Shopping in early September, Hyundai Home Shopping at the end of September, and Home & Shopping in October. It was also going to introduce the service to Home Plus,, and at some point. Related to this issue, an official at LG CNS explained, “It took a longer time to develop a system. So, the start of the service have been delayed.”

However, industry analysts are saying that weaker-than-expected results are a major reason behind the slow expansion of affiliated stores, rather than the system development. The home shopping industry believes that the payment rate of Kakao Pay in GS Home Shopping is lower than expected.

Online payment service providers and credit card companies think that Kakao Pay's fees are the chief obstacle to increasing the number of affiliated stores. In general, online payment service providers take away 3.4 to 4.0 percent of the total transaction from shopping malls, including 2 percent for affiliated stores of credit card companies. Nevertheless, Kakao Pay collects more than 4 percent by additionally reflecting a toll charge for using Kakao platforms. And LG CNS also pays for using Kakao platforms.

The number of subscribers for Kakao Pay reportedly surpassed 1.2 million as of October.