Merchants, consumers shun using Zero Pay

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By Lee Kyung-min

An increasing number of merchants are expressing frustration toward “Zero Pay,” a mobile QR code-based payment that enables a direct transaction between consumers and merchants without using credit cards.

The new method was initially welcomed by small- and medium-sized enterprises (SMEs) and the self-employed as an ideal alternative to using credit cards that charge what they claim are “unreasonably high” transaction fees.

However, the time-consuming, complicated transaction approval process is increasingly irking both the merchants and customers.

“It's the height of inconvenience,” said a man in his 50s running a small eatery in Jongno, Seoul.

“It takes up to two minutes for each transaction from when a customer runs the QR code app from their mobile phone to enter the price amount until I make sure the cash transfer is complete, a process that requires five seconds tops using a credit card,” he added.

Using the system is in no way a help in boosting profit when everybody is in a hurry especially during lunch or dinner hours.

“Time is money. I don't want to waste time to make the payment process longer than what it has been. Neither would the customers.”

According to data from the Financial Supervisory Service (FSS), only 8,633 transactions totaling some 199 million won ($175,000) were made using Zero Pay in January.

The number accounts for a mere 0.0006 percent of 156 million transactions, and the amount 0.0003 percent of 58.1 trillion won made with credit card firms in the same period.

In January, only 46,628 SMEs in Seoul registered to use the payment system, accounting for less than 10 percent of the over 660,000 such enterprises in the city.

A much greater hassle is inevitable as cash transfers are designed to be confirmed only by an account holder, the business owner, not part-time workers.

“Part-timers can help customers scan QR codes and enter price amounts. But at the end of the day, cash is wired to my account, which means I have to constantly be notified of and check each and every sale made at the shop,” said the shop owner.

“I cannot have my employees access the account freely. No shop owners would.”

Not being able to use a point of sale (POS) system is another major deterrent to using Zero Pay.

Through a POS system, the merchant calculates the total amount for services and goods provided and prepare an invoice for the customer in one step. The system is widely used to calculate sales involving credit cards in one simple step, an easy way to file tax reports.

But Zero Pay is considered a cash transaction, which requires a whole different set of rules to calculate sales tax.

“I don't understand why the city government is in such a rush to implement a system with obvious shortfalls. If it really seeks to help SMEs, they should care about making the system fully functional before asking us to use it,” he added.