The Korean online payment market is rapidly expanding, but there is no native online payment service such as Alipay or PayPal to serve the increasing number of people looking for a digital platform for card and payment information.
When online payment service providers or foreign IT companies are leading the local online payment market, security problems are precipitated, which has led the Credit Finance Association of Korea (CREFIA) to call for a change how the marketplace is controlled as online payments expand.
“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.
Alipay and PayPal are of particular concern to Lee, as their already established economies of scale could kill any local online payment market in its cradle by undercutting on fees that a less established player would need to charge to get established.
According to CREFIA, the range of fees demanded by foreign firms is 2.36 to 3.97 percent. This is in comparison to South Korean firms that are charging 3.4 to 4.0 percent.
