Latest news on the next-gen tech in Korea
As the country with the highest number of adults who report owning a smartphone (cf. picture below), this is almost impossible to find a person without a smartphone in Korea. In this regard, infrastructures have been developed accordingly to ease the life of Korean residents. Among the sectors that largely took advantage of this situation, (1) the payment industry has been evolving rapidly, providing enhanced convenience for Korean residents. (2) Universities and students are also benefiting from this situation as the government is planning to make the issuance of graduation diploma and transcripts as mobile digital certificates possible from the end of the year.
Overview of the simple payment market in Korea
As non-face-to-face consumption is increasing due to the impact of COVID-19, the simple payment market is rapidly growing and more and more companies are jumping into it. That said, according to a variety of experts in the industry, competition will not be easy as the market is already saturated.
Simple payment is a service that enable the storage of payment card information in advance on mobile devices or PCs while enhancing convenience by using authentication methods such as password-based authentication, biometric authentication or a touch-and-pay technology when making transactions. As the Korean government eased related regulations such as the end of mandatory use of public certificates, security cards, and OTP, a series of services launched by a variety of companies named ‘OO Pay’ were launched one after another in 2014.
The simple payment market is showing rapid growth. According to the Bank of Korea, the average daily amount of simple payment use has significantly increased from $55 million in 2016 to $386 million last year. The number of users also soared from 2.1 million to about 15 million during the same period.
In particular, the COVID-19 crisis has fueled this trend. According to the Bank of Korea, due to the influence of coronavirus 19, consumers’ acceptance of new digital payment means such as non-contact and non-face-to-face payment services has increased, providing an opportunity for digital finance to spread nationwide. The amount of simple payment in February and second half of last year (when the number of confirmed cases of coronavirus surged) increased by nearly 20% compared to the same period the previous year.
That said, the market is already saturated. According to the Financial Supervisory Service, there are already 50 types of simple payment services in the market as of the end of 2018. The market originally included big tech companies, followed by terminal manufacturers and financial companies.
As even retail and distribution industry’s stakeholders enter the market one after another, competition seems to be heating up. In addition to e-commerce companies, distribution conglomerates, food and delivery apps have recently entered the market.
The arrival of latecomers in the simple payment market can be explained by the fact that these companies look for securing ‘loyal customers’. By operating simple payment services, these companies can apply a strategy aiming at binding consumers to their platform. In general, it is said that the purchase unit price per simple payment is more than 20% higher than that of general payments. In the long term, these companies can also expand their data business with consumer’s data accumulated through simple payments.
The e-commerce industry’s stakeholders paved the way for the adoption of simple payment service among the companies from the retail and distribution industry as various companies have deployed such services. A leading e-commerce application provider, for example, has integrated a simple payment service that helped increase the number of subscribers to its platform. Distribution conglomerates that have started strengthening their online business early on are following closely behind.
As marketability has been verified, competition seems to be intensifying as latecomers jump into the market. In the second half of this year, several companies including conglomerates have announced that they will launch their own simple payment services. Although six years have passed after first-mover launched their services, it seems that late movers are still considering to enter the simple payment market as online payments continue to increase and the online marketplace needs to be strengthened.
It remains to be seen whether latecomers can achieve results. Some experts predict that only some services that have established themselves as the main means of transaction by expanding partnerships will eventually survive. In particular, unlike Big Tech players, distribution and food companies’ payment services are far behind in terms of versatility. Excluding mobile phone manufacturers and financial institutions, the top three big tech companies accounted for 65.3% of the total amount of simple payment usage, up to about 10% points from the previous year (55.7%). Another problem is that consumers’ fatigue is rising as each online mall develops its own payment systems, implying the installation of various applications.
Source: http://news.kmib.co.kr/article/view.asp?sid1=all&arcid=0924206389&code=11151400
Universities’ Certificates to be issued as mobile digital certificates from this year
From the end of the year, it will be possible to get graduate diploma and transcripts issued as mobile digital certificates as the Ministry of the Interior and Safety made an announcement following the signature of a MoU with two companies specialized in digital certificate issuance for universities.
Starting from the end of 2021, most public and private universities will be able to issue certificates (e.g., graduation diploma, transcripts, etc.) as smartphone-based digital certificates. The Ministry of the Interior and Safety announced on the 26th that it will sign an MOU with two digital certificate issuers to promote the use of digital certificates.
Both private companies specialize in Internet certificate issuance services. Currently, more than 400 universities across the country are issuing 15 types of certificates such as graduation diploma, enrollment, and grades. Through this partnership, the Ministry of the Interior and Safety plans to provide 340 university certificates as smartphone-based digital certificates by the end of the year.
Currently, to get a university certificate, users need to find a nearby community center or apply on the ‘Government 24’ site before visiting the community center to receive it. Alternatively, users can print certificates in paper format through the website of certificate issuing agency and submit it. With the introduction of this new service, users will be able to apply through the Internet certificate issuance website and receive it as a mobile digital certificate. For doing so, users will need to download and install the ‘Government 24’ app on their smartphone, and get an ‘e-document wallet’. Then, they will have to select the method of receiving their certificates.
The Ministry of the Interior and Safety expects this service to reduce the issuance time and cost while enhancing convenience. In the future, the government will continue to cooperate with related organizations so that university certificates, which are necessary for employment, preparation for advanced schools, and national certificate tests, can be issued in digital certificates.
Source: https://www.ajunews.com/view/20210826112137665
Our view: Korea’s digital ecosystem is being very active, boosted by local tech giants that are constantly developing new applications for Korean users. Simple payment services became a substantial component in the growth of the big tech companies that is nowadays imitated by new actors that try to enter a saturated market. It’s worth mentioning here that the payment market is being dominated not by financial institutions but by local tech giants. In Europe or in the US, it seems that this market is still dominated by traditional financial players as reflected in this insightful podcast. It remains to be seen whether this trend will continue with the adoption of new means of transactions based on digital assets such as CBDC. Meanwhile, the government is keep moving towards the digitalization of the Korean society by converting university certificated in mobile digital certificates. With the future release of the mobile drivers’ license, it will be interesting to see whether these certificates could be stored in the same wallet than the mobile drivers’ license to enhance user’s convenience.
