InterviewHow closed payment system holds back Korea's global reach

Visa Korea Country Manager Patrick Storey speaks to The Korea Times at the company's office in Seoul, Thursday. Courtesy of Visa Korea

When Patrick Storey moved to Korea in 2021 to work as the country manager for Visa, he didn't expect his first obstacle to be at a subway station. He got up early to catch the train to work and tried to tap his contactless Visa card at the gate — just like he did in Singapore, his previous posting. But no, that didn't work here.

He then went looking for a ticket machine. Again, no luck — the machine didn't accept cards for payment. On a Monday morning, that meant wandering around in search of an ATM. Eventually, he found one, withdrew some cash, and returned to the ticket machine. But once more, no success — the machine rejected the bill and spat it out.

"The transit system in Korea is fantastic. The trains run on time. They're clean, they're efficient, but the payment can be a pain if you're not Korean," Storey told The Korea Times in a recent interview.

Korea has the culture the world wants, but not the payment system.

Foreign nationals often struggle to take Korea's public transportation, because it doesn’t support what's known as an "open-loop payment system" — a system that allows riders to use everyday contactless debit or credit cards or mobile wallets, even if they're not issued in Korea.

The system was first introduced in London in 2012 and has since been adopted in major cities such as New York, Hong Kong and Singapore. In 2024 alone, Visa processed over 2 billion contactless transit fare payments — more than double the volume recorded in 2022.

A sign reading “Only Domestic Cards are Accepted” is displayed above KTX ticket kiosks at Seoul Station, March 26. Only two machines accept international cards, one of which is out of order. Korea Times photo by Jung Da-hyun

However, under the current setup in Korea, foreigners must purchase a separate transportation card, such as a T-money card, which can only be topped up with Korean won, or obtain a domestic credit/debit card that supports transit payments. While some buses previously accepted cash, many have gone cashless.

Korea's transportation payment system, known as payOn, has remained the dominant method since its launch in 1997, giving domestic stakeholders little incentive to address its limitations.

This led Korea to have one of the lowest rates of contactless payment adoption in the Asia-Pacific region. It's a surprising fact for a society as technologically advanced and cashless as Korea, Storey noted.

And the challenge extends beyond public transit. Many Korean websites tailor their systems for domestic users, often requiring identity verification via a Korea-registered mobile number — even though it's not legally required. Global payment methods like overseas-issued Visa or MasterCard are frequently not supported.

This limited accessibility may partly explain why inbound online spending lags far behind outbound. According to the Bank of Korea, in 2024, Koreans spent 8.1 trillion won ($5.5 billion) on foreign goods online, while overseas consumers spent only 1.6 trillion won on Korean products — about one-fifth as much.

Storey believes that Korea is missing a significant opportunity. If the country's payment systems became more inclusive, it could unlock far greater global demand.

Foreign tourists take photos in front of Gyeongbok Palace in Seoul, Nov. 19. Korea Times photo by Shim Hyun-chul

Tangibly, it would support the tourism industry by encouraging more visitors to explore beyond Seoul. Intangibly, it could attract spending from people around the world who may never set foot in Korea but are deeply engaged with its culture, from K-pop and K-dramas to fashion and beauty.

"If we make payments more convenient for people every day, and easier for merchants to get paid, you expand the market from the 50 million plus people living on the peninsula to potentially 9 billion people around the globe," he said. "They've settled into a very efficient domestic market, and they don't realize that these are opportunities they're missing."

That's why he spent the past four years working with stakeholders in Korea — not just to build infrastructure, but to shift public perception.

A key milestone came this year, when Visa introduced an open-loop payment system for Jeju's transportation network, following a March agreement with the island's self-governing province. Since Aug. 15, foreign visitors have been able to ride without needing a separate ticket or transit card.

Storey said he works every day with clients to define Visa's purpose, especially as the payments landscape rapidly evolves with the rise of big tech, easy payment providers and even stablecoin players.

"It's a question we try to answer with our clients every single day: Is there friction in commerce? How can we make the payment experience better — for both buyers and sellers?" he said. "In that sense, I see tremendous opportunity here, particularly in cross-border commerce and among small to medium-sized enterprises."