Do not go gentle into that good night, old age should burn and rave at close of day; Rage, rage against the dying of the light, though wise men at their end know dark is right, because their words had forked no lightning they, do not go gentle into that good night.
Kakao's entry to Zero Pay to change payment market
By Jhoo Dong-chan
gettyimagesbank
By Jhoo Dong-chan
Kakao Pay's decision to launch its own Zero Pay service is expected to become a game changer in the nation's digital payment service industry.
Introduced by the Seoul Metropolitan Government, Zero Pay is a QR-code transaction platform that is aimed at reducing the financial burden on small businesses that pay transaction fees to credit card companies.
The platform was first met with a lukewarm response from Seoul citizens during the one-month test run period from Dec. 20, but the entry of giant payment service providers such as Kakao and KT makes the platform more widely available.
Kakao Pay, a payment service affiliate of the nation's messenger service provider Kakao Talk, had previously said it wouldn't be devising its own Zero Pay platform, but has since shifted its stance, announcing it will introduce its own version of the platform next month.
Industry observers said Kakao's entry will bring about a profound change in the payment service market.
“Nobody used the Zero Pay service during the test run period. But if a big player like Kakao Pay joins, it will be a game changer,” said a credit card industry insider.
“Less consumers are using conventional payment services such as debit cards since a number of alternative payment methods were introduced. Zero Pay is a pan-government effort. The synergy with a major player like Kakao will be enormous.”
There are also hurdles.
Payment service firms say it's necessary for Zero Pay to allow extension of credit in order to attract more consumers and sales. Granting of credit often encourages customers to speed up or increase the amount of their spending.
Credit offering, however, requires firms to go through a series of advance procedures such as checking each customer's credit information and default rate.
Smartphone micropayment services have been allowed to offer credit since they were introduced. However, sources say that of the total 5.95 trillion won ($5.28 billion) worth of micropayments via smartphones, more than 1 trillion won, or nearly 30 percent, was overdue in 2017.
The Seoul Metropolitan Government signed an agreement with 26 franchise companies and the Ministry of SMEs and Startups to cooperate on expanding Zero Pay so more consumers could utilize it and more stores can cut out transaction fees.
The participating franchises include Golfzon, Kyochon F&B, Ediya Coffee, emart24, Paris Croissant and Ministop Korea. Following Seoul's lead, two regional governments ― Busan City and South Gyeongsang Province ― have also introduced the payment system.
Eleven mobile banking apps, including KB Kookmin Bank's Liiv and Industrial Bank of Korea's i-ONE Bank started featuring Zero Pay along with four standalone payment apps, including Naver Pay, during the test run period.
Merchants with annual sales below 800 million won pay zero processing fees for Zero Pay purchases. Merchants with annual sales between 800 million won and 1.2 billion won pay 0.3 percent of the purchase value, while those selling 1.2 billion won or more pay 0.5 percent.
The government is granting tax deductions equal to 40 percent of purchases customers make with Zero Pay. The tax deduction cap for regular credit card purchases is 15 percent.