South Korea’s favourable environment for digital payments built a strong foundation for another year of continued growth in digital payment transactions and e-commerce. As the awareness of digital payment services among South Korean consumers has been kept high prior to 2020, consumers did not hesitate to increase digital payment’s share of total spending especially for online activities when the COVID-19 outbreak first hit the country in Q1 2020.
While Samsung Pay and Naver Pay maintain the leading position in proximity payment and remote payment, respectively, the competition among major operators has become more intense than ever. For example, Naver Financial announced in Q4 2020 that the company will expand Naver Pay’s presence in offline retail outlets, which is a potential threat to major players in proximity payment.
In 2020, investment in 5G infrastructure was reduced more than anticipated because of the uncertain economic outlook resulting from COVID-19. Major telecom companies struggled in making progress with building 5G network infrastructure as construction was put on hold intermittently to prevent infection.
Retailing is the leading industry contributing the most to the growth of digital payments in South Korea. Aside from the continued expansion of online shopping in the country, the growth of subscription services mainly cater to consumers seeking convenience.
South Korea’s population using credit cards is likely to show an upward growth trend as the government allows financial services firms to issue credit cards to teenagers starting from 2021. According to the Financial Services Commission, teenagers over 12 years old can own credit cards from June 2021 with parents’ consent.
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