Naver, Kakao to compete in mobile payment services in Japan

By Kim Bo-eun

Naver and Kakao Pay will extend their mobile payment service battle to Japan in June as both are set to launch services there, which will enable Korean travelers to Japan to make purchases via their systems.

The move comes after the government revised related regulations a week ago to enable local mobile payment services to operate overseas. The revised regulation will go into effect today.

This is a promising opportunity for Naver and Kakao, which both operate mobile payment systems here. To seize the opportunity, they have joined hands with global counterparts for overseas services.

The mobile payment systems have enormous growth potential as they do not charge fees for global purchases, like credit cards do. Card users pay about 1 percent in fees to global card companies such as Visa or Mastercard when making purchases overseas.

The mobile payment system also enables users to skip the currency exchange process when they travel overseas. Instead they will be able to make payments in foreign currency through the system, if they charge their applications with Korean won.

Users will be able to see how much they are paying in Korean won when they make payments in foreign currency. This compares to overseas credit card purchases, for which it takes time for users to check their payments in Korean won.

Naver has partnered with its Japan-based subsidiary Line's Line Pay, as well as WeChat Pay of China's Tencent.

Line Pay's presence in Japan gives Naver an advantage, as there are about 1.6 million stores that accept payments through Line Pay in Japan.

“The plan is to enable Korean users of Naver Pay to make purchases via the medium at stores in Japan that accept payments through Line Pay and to enable Japanese users of Line Pay to make purchases using the medium at stores in Korea that accept payments via Naver Pay,” a Naver Pay official said.

Naver Pay plans to expand its usage in other neighboring countries as well, although the official declined to specify.

Kakao Pay has joined hands with Alibaba's Ali Pay, which is the world's largest mobile payment platform. Kakao also plans to enable Korean users of its mobile payment system to use this at stores in Japan where purchases can be made through Ali Pay, and for Japanese users of Ali Pay to make payments through Kakao Pay at stores accepting this in Korea.

"Our plan is to enable Korean travelers to use our service at stores they are likely to visit on trips to Japan," a Kakao Pay official said.

"We will begin services after the process of registering our license is completed."

Kakao Pay plans to make its service available in one or two more countries within the year.