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Use of Mobile Payment in China is
2.7 Times More than in Korea
- The penetration rate of smart phones in South
Korea is higher than that of China, but Korea’s use of mobile payment service
is far behind China -
South Korea's penetration
rate of smart phones is 1.4 times higher than that of China. However, the use
of mobile payment in China is nearly three times more than in South Korea.
According to ‘A Comparison
of the Third-Party Mobile Payment Market in South Korea and China and its
Implication’, issued by the Korea International Trade Association (Chairman,
Kim Young-Ju) on September 23rd, the penetration rate of smart phones
in Korea and China was 94.1 percent and 69 percent, respectively. However, when
it comes to mobile payment usage, China overwhelmed South Korea at 71.4 percent
to 26.1 percent. The amount of mobile payments in China also increased by about
32 times over the past 4 years from 6 trillion yuan in 2014 to 190.5 trillion
yuan last year.
In the Chinese mobile
payment market, Alipay and WeChat Pay dominate the market with their
convenience, versatility and low fees. They reduced the cost of retailers and
the entry barriers of consumers by using a QR code method that does not require
any specific device, and expanded the market with the lower fee than credit
cards. The growth of the mobile payment market has led explosive expansions of
the online-to-offline (O2O) service markets, including Internet shopping, car
sharing, and food delivery.
In contrast, Korea is having difficulties in
creating mobile payment demand as different service providers such as Samsung
Pay, Naver Pay, Kakao Pay, and PayCo use different methods. South Korea is
failing to catch up with China's convenience and versatility as consumers and
sellers need to use a specific application for each provider, or need to have
devices, and some payment services are available only at certain retailers. The
high penetration rate of credit cards, low fees, and the large number of member
retailers also slow down demand growth for mobile payments in Korea.
Shim Joon-seok, head of
Shanghai Branch of the Korea International Trade Association, said, “Mobile payment service has the advantage of not only expanding user
convenience but also promoting the development of FinTech industry.” He stressed, “Rather than following China's
QR code model, Korea need to actively develop business models such as mobile credit
payment services based on the high penetration rate of credit cards.”
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