KnowSouth Korea

Receiving Payment From Your Customers

Unsurprisingly – given South Korea’s advanced technological capabilities – South Koreans largely rely on electronic payment mechanisms for the purchase of goods online. This can be good news for a foreign e-retailer into the territory, as cash-on-delivery is not a common payment method here.

Bank cards are overwhelmingly the most popular online payment method in this country, accounting for some 70% of these transactions.

BANK CARDS

  • Consumers in South Korea make an average of 129.7 transactions every year using their credit cards, exceeding many Western markets. The average American consumer, for example, only makes 77.9 transactions, though South Korean transactions tend to be lower-value purchases.
  • Some peculiarities present in the South Korean market are made apparent through the use of bank cards to make purchases online, and these need to be taken into account before setting up an online shop in this location.
  • E-retailers, for example, need to make sure they are able to accept local credit cards, as fewer than 20% of online shoppers in South Korea have international versions.
    Additionally, whilst the majority of local cards in South Korea are co-branded with Visa and MasterCard, these cards require a market-specific authentication process – one that is only compatible with Internet Explorer. This is, however, expected to change in the near future.

NUMBER OF CREDIT CARDS: 112 MILLION
NUMBER OF DEBIT CARDS: 90 MILLION
The average South Korean consumer (aged 18+) has 4 credit cards.


ALTERNATIVE PAYMENT METHODS

Alternative payment methods make up roughly 30% of South Korea’s online payment landscape, and so are an important consideration for e-retailers broaching this market. Some alternative payment methods worth considering include:

  • Teencash, a special card for young people and those who are ineligible for credit cards.
  • ARS, a system for mobile payments wherein the cost of any goods purchased online gets withdrawn from a consumer’s mobile account.
    Kakao Pay, which launched in 2014 and gained more than half a million users after just three weeks. Up to 20 credit cards can be registered on Kakao Pay.
  • Naver Pay, developed by the company owning South Korea’s foremost search engine. This online payments initiative launched in June 2015 and, impressively, Naver Pay has partnered with 14 local banks and credit card firms to provide its payments services.
  • Samsung Pay, which has also been launched for a trial during 2015 in South Korea.

Western online payment providers such as Amazon and PayPal are expected to make significant gains within South Korea over the next 5 years, though, as indicated above, e-money has yet to gain a foothold in the South Korean market.

MOBILE PAYMENTS

Mobile purchasing in South Korea has exploded in recent years, and many of the payments services listed above have/are special services for mobile devices. As an e-retailer, putting in place mechanisms to accept mobile payments in this location is therefore of the upmost importance, particularly as shoppers in South Korea who purchase goods through mobile devices tend to spend more when compared to conventional online consumers, or those who purchase goods in store.

For more information on mobile purchasing in South Kores please visit reaching and engaging your consumers.

Other areas of interest

Meeting your regulatory responsibilities

There are various options available when it comes to establishing yourself in the South Korean market.

Reaching and engaging your consumers

Consumers in South Korea expect excellent after-sales customer service, including a free local contact number for advice and support.

Getting The Goods To Your Customers

Around 50% of South Koreans have reported that slow delivery is one of their primary concerns.

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