Finance 2024-01-1015:55
A duty free shop in downtown Seoul's Myeong-dong is crowded with visitors, in this June 2023 photo. Yonhap
By Lee Yeon-woo
Kakao Pay's transactions involving foreign tourists in Korea experienced a 14-fold surge within a year. This increase is attributed to the growing number of foreign tourists and the expansion of the mobile payment system's offline affiliates.
According to financial industry sources, Wednesday, the amount spent by foreign tourists using Kakao Pay in offline stores increased 14 times compared to last January. During the same period, its number of transactions and users increased eightfold, respectively.
Areas with high tourism demand showed marked increases, with Seoul, Gyeonggi Province, Incheon, and Jeju leading the way. Seoul's Myeong-dong, a popular destination for foreign tourists, contributed significantly to this share.
In terms of payment locations, it was observed that retail establishments like department stores and duty free shops, as well as convenience stores, had relatively high transaction volumes. These places were among the pioneers in establishing payment infrastructure catering to foreign tourists.
The significant increase can be attributed to Kakao Pay's strategy to become a "global cross-border transaction system."
Since 2019, the mobile payment system has facilitated transaction services for both Koreans traveling overseas and foreign tourists in Korea.
This has allowed domestic users to make payments abroad without currency exchange and enabled foreign tourists to use their native mobile payment services at Kakao Pay-affiliated stores in Korea. It is the only fintech company in the domestic market providing such a service.
Kakao Pay adopted this service in response to trends in countries around Asia, where 80 percent of foreign tourists originate. These countries predominantly use QR payment systems over credit cards.
As the tourism industry rebounds from the severe downturn caused by the COVID-19 pandemic, Kakao Pay is gearing up for an expected surge in inbound payment demand from foreign tourists. The company is exploring various strategies, including the expansion of its network of affiliated merchants. For instance, it is distributing QR payment kits to small business owners, aiming to help them benefit from the anticipated increase in tourism.
Kakao Pay is also actively enhancing its integration with various international mobile payment services to facilitate their use in Korea.
The company has either completed or is in the process of integrating with several prominent payment operators. These include Alipay from China, AlipayHK from Hong Kong, GCash from the Philippines, Touch 'n Go and Public Bank Berhad from Malaysia, TrueMoney from Thailand, Tinaba from Italy, EZ-Link, OCBC Bank and ChangiPay from Singapore, MPay from Macau and HiPay from Mongolia.
Kakao Pay aims to process 60 percent of the annual transactions of the 1.3 million foreign tourists visiting Korea.
"As the only domestic provider offering a payment network to international easy payment businesses, we are committed to fulfilling our responsibility," a Kakao Pay official said.
