South Korea is overall a credit / debit card heavy nation; however,mobile wallets are on the rise and have already overtaken cash in the country. As a result of the growing market many firms such as KakaoPay, Samsung Pay, SSG Pay, etc. have entered the market all around the same time and created a fierce competition for the top spot. The current standing leaders areKakaoPayandNaver Pay; shortly followed byToss, but PAYCO is in the 4th spot and still has a large portion of the market.
What is PAYCO?
PAYCO is a mobile wallet application and coordinating card for offline purchases. The application is serviced via a popular bank in Korea. Nonghyup bank created it with the intent to become a lifestyle platform that interconnects multiple features. Payco provides payment, coupon, public, and financial payments viainterlocking the payment gateway with credit card payment windows.
The application has about 9.1% of total Korean market share according toBoku. Payco is popular because it is well-connected and widely accepted. Over 90% of South Korean merchants accept Payco. Then, in addition to being usable in most online stores, Payco offers an offline payment service with 2 million 700,000 stores. The company also has partnerships and is an innovator in the field. Such as being the first S. Korean mobile payment available onYouTube, or Payco’s partnerships with Samsung Pay / Samsung Card, t-money (South Korea’s train system), University dining, and all of the top 5 convenience store chains to expand their network. Furthermore, their collaborations through Nonghyup bank expand Payco's usage, such as NHN's Ticketlink, Comico, and so on. Users like the application for purchase history tracking, points on purchases, and coupons outside of its connected network.
Given its partnerships, the application appears to be very domestically focused; however, it has a global user base as well.
How popular is PAYCO Globally?
Payco has a global application; though most of their global use is completed via foreigners with bank accounts in Korea; and again, partnerships.Earlier, PAYCO entered the Japanese market in August last year by establishing a partnership with Incom Japan, the No. 1 Japanese prepaid card retailer.Also Payco entered aconsortiumwith LinePay, Naver Pay, iPass, etc. for cross-border payments with a series of other companies in 2020. Payco is the consortium's offline payment specialist. In this case, foreign customers are interacting with the company in a more indirect manner. The Korean firm is said to be focusing more on South East Asia (particularly Thailand) for future growth. However, because Payco currently only completes transactions in KRW, it is unclear whether the strategy will be to expand the application or to globalize indirectly again.
How does it work?
Creating an account is quite simple like many other mobile. The company requires setup information and verifying contact details (such as phone number, nationality, gender, D.O.B, phone number, address, etc.). This is necessary ensure the user is able to make transactions (though other features will require further setup). Then the new user has to add a debit card, credit card, or Samsung Pay account to the account so that the account has funds to pull from. After this the account is created and customers can begin making purchases.
User Flow – Offline
Card Method
Follow basic credit card procedures in store at checkout. Samsung card is connectable to the application account for online purchases.
Code Method
User Flow – Online
General Online Payment
PAYCO Points
As points add up from using the application, in the future users can utilize said points for payments. Note, only merchants that accept point payments will allow this method. Also if this method is used 2% of the payments by points will be returned in the following month. The procedure would be the same as a general payment, just rather than choosing a card, the user will simply pick points.
Is it safe?
PAYCO has a variety of safety measures such as being in compliance with PCI-DSS. Though more importantly, its backing via the bank is what provides significant safety as it is protected via bank system. Also requiring a passcode in all payments help increase safety measures within purchases.
Overall, if a merchant wants to do business in South Korea; having PAYCO will be a necessity due to its high market share and its ability to be used within the offline space.
Just as a reminder... At eromnetwe have all the major payment methods in Korea including: KakaoPay, Samsung Pay,Payco, Toss, SSG Pay, and L.pay, etc. Click the link below if you want to learn more about eromnet’s South Korean Payment method portfolio.
Then, if you’re not sure whether you should move your business into the South Korean market, take a look at the image below to understand more about the market and see if it’s right for you.
That's it for today! We'll be back next week
