• Use of Mobile Payment in China is 2.7 Times More than in Korea
    2019-09-23 hit 856

    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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