South Korea's digital wallet market was valued at US$4.601 billion in 2020.
The market for the digital wallet is booming rapidly in South Korea on account of the high penetration rate of smartphones and the availability of high-speed internet in the country. According to the Bank of Korea, only about 20 percent of payments are made using cash in this country. South Koreans are increasingly switching to digital wallets and mobile apps to pay for goods and services for online and offline purchases. Continuous investments by tech giants in mobile payment systems with the South Korean government eased up financial regulations in 2015. Also, they contributed to the rapid growth of the digital wallet market in South Korea. For instance, Kakao Pay received a US$200 million investment from Alibaba's Ant Financial in 2017 due to a rapid rise in users and transactions.
According to the 2017 Electronic Pay Service Usage report, the total volume of payments made via mobile payment services reached a record 67.2 billion won (US$57 million), up from 158.4 percent in 2016. Favourable government policies to support the expansion of mobile payment services in the country will also drive the market growth of digital wallets in South Korea during the forecast period. The country’s Financial Services Commission (FSC) has decided to open the closed inter-bank payment networks to non-bank financial companies, which will likely surge the growth of the digital wallet market. The growing e-commerce industry also boosts the market growth of digital wallets in South Korea. The COVID-19 pandemic outbreak has further accelerated the use of digital contactless payments to curb the spread of the virus.
South Korea’s digital wallet market has been segmented based on the device and application. The market has been segmented as PCs/laptops and smartphones by the device. By application, the South Korean digital wallet market has been classified into Money transfer, recharge, movie booking, food ordering, and others.
Covid-19 Impact
During the lockdown, both the intensity and total financial value of transactions have decreased. However, because consumers are only purchasing essential goods and more goods in one transaction, the value per transaction is rising, and people are increasingly reliant on digital platforms. Following the government's imposed nationwide lockdown, cash used in South Korea has been cut in half in just a few days. Stores selling necessities are attempting to avoid cash transactions. basic convenience stores are also motivated to use contactless technology to order to avoid touching EPOS machines. Companies are targeting the unbanked and implementing policies to shift a larger volume of payment transactions away from cash and toward digital payments. The unpredictability of the COVID-19 crisis will urge the public to become accustomed to digital payment channels. With nearly 95% of total unique mobile users and 94% unique mobile internet users at (Source: Koreaherald) , handset penetration will smoothen the adoption of digital platforms for payment transactions.
Major Development
July 2021, South Korea's Blockchain Project Carry Protocol announced the release of the "Carry Wallet," which includes a crypto savings function and real-world rewards.
May 2021, Naver, South Korea's internet consortium, and Wattpad, the global multi-platform entertainment firm for stories and a leading social storytelling framework, announced that Naver has completed its acquisition of Wattpad.
Segmentation