GiftBasketsOverseas.com on the Unique Challenges of South Korean Payments and eCommerce

The South Korean eCommerce scene is a potential gold mine for foreign investors and businesses seeking to harness the country’s enormous digital payments industry and sky-high digital literacy. The country’s eCommerce market hit 17 trillion won ($14 billion USD) in March of this year, attracting merchants from all around the world.

One organization doing brisk business in South Korea is GiftBasketsOverseas.com, a gift delivery service based out of Boston. Demand has gone up since the onset of the pandemic, but the company must navigate the intricacies of the Korean digital payments ecosystem.

“We have seen an increase since [the pandemic] in demand for our services, including that from South Korea, where people need to connect more than usual because they traveled less,” Dmitriy Peregudov, founder of GiftBasketsOverseas.com, told PYMNTS in a recent interview.

Peregudov detailed how the company dealt with the challenges of the South Korean eCommerce scene, deploying third-party partnerships to meet the country’s extraordinary digital payment demands.

Challenges in South Korean eCommerce

Conducting business in South Korea can often seem deceptively simple from an outside perspective, considering the country’s close ties to Western businesses and organizations. Peregudov noted that demand for Western eCommerce is one of the highest in the region, making South Korea a tempting target for foreign businesses looking to expand into Asian markets.

“South Korea, Japan, Hong Kong and Singapore are the top four, I would say,” Peregudov said. “There’s a lot of connection with Western banking, technology, manufacturing and so on. That results, from our perspective, in a lot more gift transactions on both the business side and the personal side with Western recipients.”

Merchants that attempt to expand into South Korea are immediately faced with the perplexing array of payment options available. Both internet banking services such as IBK, Kookmin and Shinhan and local credit cards from providers including Hana, Hyundai, Samsung and Shinhan are commonplace among Korean consumers, leaving merchants overwhelmed with the variety of payment methods they must accept.

“We see the countless ways [in which] our South Korean customers are paying beyond just regular credit cards,” said Peregudov. “There are a lot of local payment methods, like local payment cards and also internet banking options.”

Businesses attempting to go it alone in South Korea are likely to be swamped by the effort. Embracing third-party payment providers offers a way to cope with the endless options.

Providing Sufficient Payment Options

Many companies find that turning to a third-party payment provider is the most efficient solution to handling the multiple payment types and other complexities of the South Korean eCommerce market. GiftBasketsOverseas.com was one such example, said Peregudov, and the company selected a provider that integrates these payment options with minimal effort on the retailer’s part.

“We have an integration partner that we work with, and we are basically offering all those methods in South Korea because this company has [those options] integrated,” he said. “All these local payment methods are available under one roof, and whenever we see a South Korean customer, we offer those options based on their IP address and the country location. We show those options as available, and then the consumers often choose those as opposed to a regular credit card or bank payment.”

Those companies that succeed in these objectives can harness a rapidly growing economy. Those that fail will be locked out of South Korea until they find a way to navigate both the payments and the culture.