Bo-eun leads the digital content team. She has covered foreign affairs, North Korea, tech, economy and gender issues at The Korea Times. She did a short stint at the South China Morning Post in Hong Kong, where she obtained a new perspective on news production and life. Small sources of joy for her are lounging in the sun, having a good latte and swimming.
Controversy continues over Naver Pay's fee rate
Naver Financial CEO Choi In-hyuk / Courtesy of Naver Financial
By Kim Bo-eun
By Kim Bo-eun
Naver Financial is facing continued pressure over high fee rates charged to merchants.
The financial services arm of the portal giant is under increased scrutiny after the earnings of Naver Pay rose to a historic high in the first half of this year, after years of operating losses.
Lawmakers attribute its profits to the hefty fees Naver Pay charges.
Naver Pay was launched in 2015 as an easy online payment service. Naver Financial, established last November, has taken Naver's financial services, including Naver Pay, under its wing.
Naver Pay, which reported heavy losses up until last year, posted an operating profit of 10 billion won in the first half of this year, after operating losses of 37.7 billion won in 2017, 65.7 billion won in 2018 and 44 billion won in 2019.
The higher earnings are attributed mostly to increased online purchases amid social distancing during the COVID-19 pandemic.
Payments made via Naver Pay in the first half of the year totaled 11.2 trillion won, compared to 16.18 trillion won in the whole of 2019. Its chief rival KakaoPay also saw payments surge in the first half ― to 4.85 trillion won, compared with 6.89 trillion won for all of 2019.
But KakaoPay posted an operating profit of 50 million won during the period, with the difference attributed to Naver Pay's fees.
Data from opposition lawmaker Yoon Chang-hyun showed fees Naver Pay charged merchants when customers paid with their debit or credit cards via its system exceeded fees of credit card companies and KakaoPay.
Naver Pay's fees ranged from 2.2 percent to 3.74 percent, depending on the amount paid. The rate for credit card companies ranged from 0.8 percent to 2.3 percent, while KakaoPay charged 1.04 percent to 2.5 percent.
According to data from Rep. Kwon Chil-seung of the ruling Democratic Party of Korea (DPK), Naver Pay has collected more than 1.12 trillion won in fees over the past three years.
A Naver Financial official said Naver Pay's general fee rate for payment services is 2.3 percent, of which 2 percent goes to the card firms.
“Fees do go higher when we offer other services in addition to the payment service,” the official said.
Naver Pay offers three payment services. Two offer additional services, including making orders, tracking deliveries, addressing customer inquiries and enabling product reviews, according to Naver Financial.
The official said Naver Pay is offering a discounted fee rate of 1 percent to 1.5 percent for small business owners, which includes the 0.8 percent fee Naver has to pay to card firms.