South Korea Digital Payment Market Overview, 2029

South Korea began its digital payment journey in the 1990s, first launching e-wallets. However, the scene saw a substantial shift with the introduction of mobile wallets such as Samsung Pay in 2013, followed by LG Pay and Apple Pay. This trend was fueled by the country's high smartphone penetration rates and government attempts to promote cashless transactions. Notably, these programs helped South Korea become one of the world's most cashless societies. The country's digital payment culture is unusual, typified by widespread use of mobile wallets, with more than 90% of smartphone users relying on them for daily purchases. This prevalence highlights the ease and efficiency provided by mobile payment options in South Korea. Furthermore, QR codes have emerged as a dominant force in enabling both online and offline transactions, offering a safe and user-friendly solution. Contactless payments based on NFC technology are gaining traction in South Korea, substantially minimising the requirement for physical interaction during transactions. This tendency is consistent with global movements toward limiting touch in payment operations, which contributes to a more frictionless and sanitary payment experience for customers. According to the research report "South Korea Digital Payment Market Overview, 2029," published by Bonafide Research, the South Korea Digital Payment market is forecasted to reach market size of more than USD 4 Billion by 2029. Several factors promote the expansion of digital payments in South Korea. The burgeoning e-commerce sector increases demand for secure and quick payment options, driving innovation in the digital payment arena. Furthermore, government support in the form of various initiatives and incentives is critical in supporting cashless transactions and creating an atmosphere suitable to digital payment adoption. In terms of opportunity, combining digital payments with industries such as transportation, healthcare, and education has the potential to open up new markets. This integration not only improves user ease, but it also creates opportunities for major growth. Furthermore, studying novel technologies such as blockchain and biometrics can improve the security and convenience of digital payments, giving them a competitive advantage in the market. Furthermore, the growth of cross-border transactions, fueled by thriving cross-border e-commerce, creates an opportunity to provide seamless and secure payment solutions for international transactions, allowing you to tap into a worldwide marketplace. The South Korean government aggressively controls the digital payment market with major legislation such as the Personal Information Protection Act, which protects user data privacy, and the Electronic Financial Transactions Act, which governs online financial transactions. Adherence to the Payment Card Industry Data Security Standard (PCI DSS) also ensures that strong card payment security procedures are implemented. These regulations establish a framework that fosters user trust and confidence while also ensuring the security of digital transactions.

The provision of solutions and services in the realm of digital payments encompasses a comprehensive array of technologies and processes designed to facilitate electronic transactions, money transfers, and financial activities across digital channels such as the internet or mobile networks. These solutions are instrumental in creating an ecosystem that ensures secure, convenient, and efficient digital payments. Transactions can be categorised based on their type, with domestic payments referring to transactions conducted within a country's borders, while cross-border payments extend beyond national boundaries. Payment modes offer diverse options for users, including cards (plastic or virtual), ACH transfers, digital wallets (e-wallets or mobile wallets), and other methods like contactless payments, biometric payments, and bank transfers. These modes cater to various preferences and needs of users, ensuring flexibility and accessibility in conducting financial transactions. Moreover, digital payment solutions serve a wide range of industries and end-user verticals, including Banking, Financial Services, and Insurance (BFSI), healthcare, IT & telecom, media & entertainment, retail & ecommerce, transportation, and others. Each industry sector benefits from tailored digital payment services that streamline transactions and enhance operational efficiency. In essence, the digital payment landscape thrives on the diversity and adaptability of its solutions and services, catering to the evolving needs of users and industries alike in an increasingly digital world. In terms of price and segmentation, transaction fees in South Korea's digital payment market differ depending on the service provider, transaction type (online/offline), and merchant category. While the average price fluctuates between 1.2% and 2.5%, robust competition among suppliers frequently results in promotional offers and discounts, providing a dynamic pricing environment that favours consumers. This competitive climate drives suppliers to develop and distinguish their offers, which leads to higher service quality and a better user experience. In terms of companies and new entrants, the market is controlled by domestic heavyweights like Samsung Pay and Naver Pay, as well as international competitors like Apple Pay and Google Pay. While new entrants may struggle to get a foothold due to current competitors' strong presence, chances exist in specific areas or through the development of novel solutions that address unmet market needs or pain points. By using technology and focusing on specific markets, new entrants can carve out a place and compete effectively in South Korea's dynamic digital payment market. The COVID-19 pandemic accelerated the broad use of digital payments in South Korea. With cleanliness and safety concerns, consumers have increasingly switched to contactless purchases to avoid physical contact. This shift in consumer behavior is projected to have a long-term impact, fueling continued growth in digital payments even beyond the epidemic. As South Korea embraces digitization, the future of its payment landscape offers more innovation and revolution, influencing how people transact and engage in an increasingly digital world. In 2021, the Bank of Korea launched a breakthrough pilot study to investigate the viability and possible impact of a central bank digital currency (CBDC). This decision illustrates South Korea's aggressive approach to embracing modern financial technologies. The pilot program is an important step in modernising the country's monetary system and remaining competitive in the global digital currency race. In 2022, the South Korean government announced ambitious plans to require real-time transaction data exchange between established banks and upstart fintech startups. This regulatory intervention aims to increase financial inclusion by lowering obstacles to accessing financial services. By promoting seamless data sharing, the effort aims to create a more linked and efficient financial environment that benefits both consumers and businesses. By 2023, South Korea's digital payment market will see significant collaborations between major businesses such as Samsung Pay and Kakao Pay and multinational firms, indicating a strategic expansion into Southeast Asia. These collaborations demonstrate the country's determination to using its advanced digital infrastructure and skills to enter emerging markets abroad. Such initiatives not only improve the worldwide competitiveness of South Korean fintech enterprises, but also help to promote regional economic integration and prosperity. South Korea stands out among its regional rivals due to its strong mobile wallet penetration rate and well-developed digital payment infrastructure. However, the growth of innovative payment ecosystems in adjacent countries, most notably China, presents both difficulties and opportunities for the South Korean market. To sustain its leadership position, South Korea must innovate and adapt to changing customer tastes and market conditions.

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Prashant Tiwari

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Considered in this report • Historic year: 2018 • Base year: 2023 • Estimated year: 2024 • Forecast year: 2029 Aspects covered in this report • Digital Payment market Outlook with its value and forecast along with its segments • Various drivers and challenges • On-going trends and developments • Top profiled companies • Strategic recommendation By Offering • Solutions • Services

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By Transaction type • Domestic • Cross Border By Payment Type • Cards • ACH Transfer • Digital Wallet • Other Payment Modes By Vertical • BFSI • Healthcare • IT & Telecom • Media & Entertainment • Retail & E-commerce • Transportation • Others The approach of the report: This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. Post this; we have started making primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once we have primary data with us, we can start verifying the details obtained from secondary sources. Intended audience This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Digital Payment industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.