Payments Trends in South Korea: Out with the Old, In with the New

by KyongSun Kong,  Neil Katkov, PhD, July 29, 2010
Industry Trends
Asia-Pacific

Abstract

In recent years, South Korea has seen the ascendance of new methods that are redefining its payments market. In 2009, a record-breaking 53.4% of private consumption was paid for with a card of some type.

In a new report, Payments Trends in South Korea: Out with the Old, In with the New, Celent provides a detailed analysis of the newest trends and future developments in the nation’s payments market. Paying for goods and services with cards is a practice that has largely permeated South Korean society as well as consumer buying patterns. The use of cards has been encouraged by preferential measures and government and bank policies.

A Celent series of interviews with South Korean consumers found that the majority of participants used a credit card. The next most popular means of payment was the “check card,” a new type of debit card that is unique to South Korea. A significant portion of consumers responded that they actively use cards because they offer benefits such as reward points or special discounts.

 Source: Celent consumer survey

“In the South Korean payments market, growth is anticipated in the debit card, mobile banking, and contactless payment sectors,” says KyongSun Kong, Analyst with Celent’s Asian Financial Services Group and coauthor of the report. “The industry also harbors high expectations for the future of incipient business models and, as such, the change that is afoot in the payments market warrants a closer look.”

In this report, Celent presents findings that highlight the burgeoning growth of electronic forms of payment and the factors fueling this growth, including direct efforts by the central government to promote the electronic payments industry. The report analyzes distinguishing characteristics of the market and the conditions of and prospects for multiple payment methods, with a special emphasis on areas in which solid growth is expected moving forward.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

3

Introduction

5

Payments Trends Through the Eyes of Consumers

8

Payments Systems in South Korea

10

Global ATM Powerhouse

12

Growing by Leaps and Bounds: Cards in South Korea

14

 

Credit Cards

16

 

Debit Cards

17

The Ever-Growing Online Banking Market

23

New Developments in the Check and Promissory Note Market

26

The Challenge of E-Money

29

 

The Stalled E-Cash Market

29

 

Burgeoning Prepaid E-Payment Card Market

30

Conclusions

33

Leveraging Celent’s Expertise

35

 

Support for Financial Institutions

35

 

Support for Vendors

35

Related Celent Research

36

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