South Korea is one of the most peculiar countries. On one hand, Korea is really good with their products, brands, technology, innovation and distribution around the world. On the other — to the western eye local internet industry is weirdly lagging behind in some vital parts.
For instance, when you browse Korean websites, it seems their design and usability is stuck in 2000s. Flash videos (flash is not dead yet?), pop-up windows, ActiveX, sometimes the website won’t open unless you use Internet Explorer (yes, really). Well, it’s getting better every year, but still — far from what we are used to with our Google, Amazon, Facebook and the rest. Meanwhile, they also got amazing internet speed, everyone has a smartphone, e-commerce is huge, and everyone uses bank cards.
It is speculated that the reason behind such uneven evolution is internet protection. South Korea, just as Russia and China, has its own search engine — Naver. Own messenger — KakaoTalk, own strong gaming companies, etc. My guess is —the reason partially lies with Korean conglomerates. Just one company would be producing TVs, oil, managing bank, waste facilities, and developing an army app. Korea is divided between conglomerates that control all possible types of businesses, and leave very little to competition from smaller companies, much less foreign.
Payments is one of the industries that suffered from no competition, thus no innovation.
from KCP website
The payment processing is made by four major companies — mostly KG Inicis and KCP. They were set up in the 1990s. Perhaps, that is the reason why the payment with the bank card or bank account on the e-commerce website requires user to install a special software to do that. Only recently it has stopped requiring Internet Explorer. Guess what, nothing changed, it is still this way.
But the booming e-commerce and strong gaming required a better process. Apparently, they could not make payment providers and banks to update this horrible payment scenario, so they started to create their own payment systems. Naver, the search engine and online portal, launched their NaverPay. Kakao messenger — KakaoPay. And NHN Entertainment — Payco. Their principle is all the same — it is a wallet that you store your credit card data with, and at the purchase only choose the relevant card, and confirm the payment with a password.
And thus, South Korea got 3 popular online payment systems that had nothing to do with traditional payment industry or payment providers.Something that the western fintech is afraid of — e-commerce companies and social networks killing them. Happened in South Korea, you guys!
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What the Money is a lifestyle channel & show about fintech, ecommerce, business and innovations by Anna Kuzmina. From Russia. With love. Follow Anna on Medium, Telegram или на Яндекс.Дзене.