With the growing popularity of digital payment systems, the South Korean government launched a project aimed at introducing a mobile payment system for small and medium-sized businesses. This is the latest step taken by the South Korean government to cancel the fees associated with electronic payments.
South Korea’s SME and start-up companies and the Korea Financial Services Commission said,the system will be tested in December and officially launched in January.
“Our goal was to formally launch the system on January 1,” said South Korean SME Minister Hong Jong-haak in Friday, “According to the plan, this should be no big problem.”
The system is tentatively named Zero Pay. It will be integrated into the APP of cooperative bank and payment platform, adopting the payment mode of scan code.
The Korean government will charge a fee to merchants using the system, and the specific rates are not yet available. As the system’s name implies, the Korean Small business unit is trying to get no fees or close to 0 as much as possible.
Cooperative companies include Naver Pay, Kakao Pay, BC Card (Korea’s largest credit card company), Korea Agricultural Bank, KEB Hana Bank, Shinhan Bank and Woori Bank. Users of these companies can use Zero Pay on their respective corporate platforms.
The municipal and provincial governments of Seoul, busan, incheon, gyeongsang south and jeolla south have also joined the project,include small shops in its area.
Various associations representing small businesses and convenience stores in Korea have also reached an agreement with the SME department.
To entice shoppers to use Zero Pay, South Korea’s ministry of small and medium-sized businesses has promised a 40 per cent tax cut for each purchase.
Another target audience for the system is Chinese tourists. The South Korean SME department plans to sign a cooperation agreement with Alipay and WeChat payment.
Choi jong-ku, chairman of South Korea’s financial services commission, said Zero Pay would benefit south Korean retail stores where 80 per cent accept bank card payments.
Analysts say user acceptance will determine the success or failure of Zero Pay.
” the consumer response will determine whether Zero Pay succeeds or fails. The transaction fee rate for lowering the merchant is not related to whether the user selects such payment method. If the credit card provides consumers with greater convenience, they will insist on down.” Yeoh Yun-ki, an analyst with the Korean Investor Service, a member of the International credit rating agency Moody’s, He said.
Meanwhile, the drive to Zero pay is unsettling for credit card companies. If launched nationwide, the new payment system will seriously undermine the basis of the credit card business.