South Korea is moving quickly towards a cashless society. In 2021,
, making it one of the leading cashless countries in the world. While COVID-19 has accelerated the adoption of digital payment methods worldwide, the trend toward cashless payments was already on the rise in South Korea before the pandemic. The South Korean central bank announced back in 2015 that it was heading for a "coinless society" and set up a pilot project to test the
. The already highly developed technological infrastructure and the fast-growing fintech industry formed the basis for the rapid financial innovation in South Korea.
The rise of mobile payments in South Korea
Amid this trend, the use of mobile payment services has surged in South Korea in recent years. The
average daily value of mobile payment transactions has increased more than 13-fold since 2016. Also known as "
easy payment services", mobile payment services in South Korea allow customers to make payments via smartphones using previously stored credit or debit card data. Users register their cards with the mobile payment service provider, which enables them to make online and offline payments using just a passcode or fingerprint scan, bypassing the complicated authentication process previously required. Mobile payment methods using electronic currency generated by loading a prepaid value onto the provider's service platform have also become increasingly popular.
Leading mobile payment providers
The mobile payment market in South Korea is dominated by
large non-bank technology companies such as Kakao, Naver, Toss, and Samsung Electronics, which launched their services in 2014 and 2015. Naver Pay and KakaoPay are currently
the most widely used services, the popularity of which is mainly
due to the convenience of use. The rising
market share of fintech companies has already put banks and card companies under enormous pressure. To counteract these challenges, banks and financial institutions have taken various measures to adapt and expand their payment services to meet the growing needs of customers. How this competition will affect the future of the payments market and drive further innovation are some of the interesting aspects of South Korea’s move toward a cashless society.
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