Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Contactless payments thrive as virus spreads
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By Park Jae-hyuk
By Park Jae-hyuk
The spread of COVID-19 has prompted Korean consumers to minimize human contact when paying for purchases, as it is known that the virus can be transferred from contaminated items as well as spreading from person to person.
While the Bank of Korea has kept its incoming bills in vaults for the past two weeks to prevent further possible spread of the virus, various data is also indicating that more people are going “contactless” when paying for things to reduce their contact with others.
Analysts expect mobile payments and payment gateway service providers to benefit from this trend.
According to Lotte Members, the volume of payments made via the company's L.pay mobile payment app rose 11.5 percent in February month-on-month, while the number of payments made at brick-and-mortar stores dropped 28.6 percent during the same period.
The company attributed this to more consumers using barcode and soundwave-based mobile payments to avoid contact with cashiers when shopping offline.
“Methods of purchase have changed rapidly since the spread of COVID-19,” said Hwang Yoon-hee, head of Lotte Members' data analytics division. “While online stores are running out of stock, offline stores are suffering from rising inventories over sluggish sales.”
The volume of online payments has also been on the rise since the coronavirus outbreak.
Online credit card sales in Korea stood at 2.09 trillion won ($1.7 billion) for the first week of February and 2.11 trillion won in the second week of the month.
After the government raised its virus alert to the highest possible level in the third week, this amount jumped to 2.28 trillion won, up 8.1 percent from a week earlier.
This is in stark contrast to offline credit card usage, which saw a drop from 7.95 trillion won in the second week to 7.26 trillion won in the third week of February.
Payment gateway service providers are being highlighted as an unexpected beneficiary of the current corona virus crisis, as they earn commission each time a payment is facilitated by their app between a retailer and a card firm or bank.
“Until the fear of the virus diminishes, NHN KCP and KG Inicis are expected to benefit from growing online payments,” SK Securities analyst Lee So-joong said. “The more the coronavirus issue is prolonged, the faster the volume of online trade will grow.”
Both NHN KCP and KG Inicis hit new, 52-week highs in February.