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South Korea Country Report

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  • Published Date: March 2022

SOUTH KOREA CARDS & PAYMENTS REPORT

A comprehensive overview of the cards, payments and consumer banking market in South Korea, with insightful commentary backed by relevant data.
An exceptionally competitive credit cards market is feeling the heat from tech disruptors, as card payments are further incentivised by tax breaks and merchant fees continue to fall.
South Korean banks are very focused on digitalisation, with many well-respected lenders getting involved in crypto assets.

Lessons from this South Korea payments report

How fiscal measures are driving card usage.
Which mobile plays have been transformative.
Why debit cards are more complex here.
How South Koreans use their credit cards.
Why prepaid spend has seen a sixfold increase.

SOUTH KOREA COUNTRY REPORT | KEY FACTS

  • South Korea's household debt continues to grow at one of the highest rates in the world, reaching over 100 percent of GDP in 2021.
  • With cash usage in decline, card payments account for the bulk of consumer expenditure.
  • The e-commerce market has grown to an estimated $153 billion in 2021. The growth of m-commerce has boosted market growth overall.
  • Payment cards are by far the preferred e-commerce payment method, although digital wallets are growing in popularity for online purchases.
  • At around 6.3 cards per adult at the end of 2021, the country has one of the world's highest card-penetration rates.
  • Some 59 percent of total cards in issue are debit cards; however, debit only accounts for 37 percent of card purchase transactions and about 21 percent of billed volume.
  • Using tax incentives, the authorities have been pushing card usage, particularly via debit.
  • Growth in both mobile proximity and P2P payments has been in the high double digits in recent years.
  • The credit cards market has maintained a healthy profit pool despite the pandemic.
  • Mastercard has retained its position as the largest credit card network in South Korea followed by Visa, UnionPay and American Express.
  • The cards market operates predominantly as a three-party system but BC Card, a joint venture involving ten banks, is an exception as it effectively operates as a four-party system.

South Korea Payments Research | Report Contents

TABLE OF CONTENTS
Demographics and the economy
Payments environment
Cards market
Mobile payments
Profit pool
The networks
Key retail banks and issuers
Acquiring and processing
Online acquiring
Regulatory and other cards market information

Appendices: South Korea Payments Data Tables

Appendix I: Demographic and economic indicators

Data table 1: Demographic and economic indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 2: Ownership of key consumer devices: 2015-2020. Estimates and forecasts to 2024.
Data table 3: Internet usage by population: 2015-2020. Estimates and forecasts to 2024.

Appendix II: Payments environment

Data table 4: Access points: 2015-2020. Estimates to 2022.
Data table 5: Account penetration: 2015-2020. Estimates and forecasts to 2024.
Data table 6: Consumer payment: trends 2015-2020. Estimates and forecasts to 2022.
Data table 7: B2C e-commerce payment methods: 2015-2020. Estimates and forecasts to 2022.

Appendix III: Cards market

Data table 8: Total cards payment metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 9: Contactless cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 10: Credit card numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 11: Total credit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 12: Credit cards profitability indicators: 2015-2020. Estimates and forecasts to 2024.
Data table 13: Debit cards numbers: 2015-2020. Estimates and forecasts to 2024.
Data table 14: Debit cards metrics: 2015-2020. Estimates and forecasts to 2024.
Data table 15: Prepaid/e-money cards metrics: 2015-2020. Estimates and forecasts to 2024.

Appendix IV: Mobile payments

Data table 16: Mobile proximity payment metrics: 2015-20. Estimates and forecasts to 2024.
Data table 17 : Mobile P2P payments: 2018-20. Estimates and forecasts to 2024.

Appendix IV: Profit pool

Data table 18: South Korea market profit pool: 2015-20. Estimates and forecasts to 2024 including credit card numbers, billed volumes, outstandings, interest incomes, net interest revenues, merchant revenues, card fee revenues, other non-interest incomes, total revenues, net credit losses, operating expenses, total expenses, pre-tax profits, merchant service charges, rollover rates, APR, net credit losses to outstandings, operating costs to revenues, ROA (pre-tax profits to outstandings).

Appendix V: Card networks

Data table 19: Networks' credit card market shares: 2015-20. Estimates and forecasts to 2022.
Data table 20: Networks' credit card data numbers: 2015-20. Estimates and forecasts to 2022.
Data table 21: Networks' credit card billed volume: 2015-20. Estimates and forecasts to 2022.
Data table 22: Networks' number of credit card transactions: 2015-20. Estimates and forecasts to 2022.
Data table 23: Networks' average credit card transaction value: 2015-20. Estimates and forecasts to 2022.
Data table 24: Networks' debit card market shares: 2015-2020. Estimates and forecasts to 2022.
Data table 25: Networks' debit card data numbers: 2015-2020. Estimates and forecasts to 2022.
Data table 26: Networks' debit card billed volume: 2015-2020. Estimates and forecasts to 2022.
Data table 27: Networks' number of debit card transactions: 2015-2020. Estimates and forecasts to 2022.
Data table 28: Networks' average debit card transaction value: 2015-2020. Estimates and forecasts to 2022.

Appendix VI: Key retail banks and issuers

Data table 29: Key credit card issuers market shares by credit card numbers: 2017-2020. Estimates and forecasts to 2022.
Data table 30: Key issuers market shares in credit card outstandings: 2017-2020. Estimates and forecasts to 2022.
Data table 31: Key debit card issuers market shares by debit card numbers: 2017-2020. Estimates and forecasts to 2022.

Appendix VII: Acquirers and processing

Data table 32: Merchant acquirer credit card market share: Estimates for 2021.
Data table 33: Credit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 34: Merchant acquirer debit card market share: Estimates for 2021.
Data table 35: Debit card merchant service charges: 2015-2020. Estimates and forecasts to 2024.
Data table 36: Credit card issuer/issuing processor relationships
Data table 37: Credit card acquirer/acquiring processor relationships
Data table 38: Credit card issuing processor market shares by card numbers: Estimates for 2021.
Data table 39: Credit card acquiring processor market shares by the number of POS transactions: Estimates for 2021.

Appendix VIII: Online acquiring

Data table 40: Online merchant acquirer market share. Estimates for 2021.

South Korea Country Report | Selected Extracts

Demographics and Economy
The country fell into a brief recession in the second quarter of 2020 as exports, which account for almost 40% of the economy, plummeted. However, the economy is currently on course for a growth average of 3.2% in the 2021-24 period.

Payments Environment
South Korea's retail banking market is well developed, highly competitive and profitable. Its payments industry is sophisticated and progressing at a rapid pace. Much of this success can be attributed to infrastructural investment, innovative technology and consumer enthusiasm.

Cards market
South Korea has one of the lowest rates of cash usage in the world: the central bank had been aiming for the country to go cashless by 2020, first by phasing out coins to reduce mint-related costs ... This drive to become cashless has since slowed with increased understanding of the difficulties involved for older people in digital transactions.

Mobile Payments
Being a technologically advanced nation, mobile banking and payment services have flourished in South Korea for many years. Nonetheless, concern had existed over the stagnation of the banking industry due to a highly restrictive regulatory environment and the domination of the industry by large financial groups.

Profit Pool
The market for credit cards is exceptionally competitive in South Korea. In the last decade, it has moved from conventional segmentation (standard, gold and platinum products) to sub-niche marketing based on cardholders' specific needs and lifestyles, spawning card types such as travel cards, rewards cards, shopping cards and discount cards.

Card Networks
South Korea has one of the world's highest card penetration rates. With a population of 52 million, the country's payment cards market is highly penetrated: there were some 286 million credit and debit cards in total at the end of 2021: about six cards per adult.

Key Retail Banks and Issuers
The top five players in the South Korea credit card market in terms of credit cards in issue are Shinhan Card, Lotte Card, KB Kookmin Card, the Industrial Bank of Korea (IBK) and Hyundai Card. At the end of 2021, these five players accounted for some 47% of cards in issue.

Acquiring and Processing
For the most part, there is no interchange in South Korea, and the credit cards market operates predominantly as a three-party system. Although most credit cards are Visa or Mastercard-branded, domestic transactions are not routed through either. For the most part, issuing processing and acquiring processing in South Korea are undertaken in-house.

Online Acquiring
Topped only by China and Japan, South Korea is the third-largest e-commerce market in the Asia-Pacific region and the seventh-largest retail e-commerce market worldwide. The size of the B2C e-commerce industry in the country was estimated at $153 billion in 2021.

Regulatory and Markets Information
The Bank of Korea, the country's central bank, is mainly responsible for price stability, but its other functions extend to the development and management of payment systems and supervisory functions.

South Korea Payments Report | Entities Referenced

11Street
1Qpay
7-Eleven
Affinity Equity Partners
American Express
Apple
Apple Pay
ATsolutions
Auction
B2B E-commerce Payment System
B2C E-commerce Payment System
Baemin
Bank for International Settlements
Bank of Korea
Bank of Korea Financial Wire Network
BC Card
BharatQR
BIS
BOK-Wire+
Busan Bank
Buy the Way
Cardo
Cashbee
CHAI
Cheque and Bill Clearing System
Choheung
Citibank Korea
Citigroup
Coffee Bean
Coinplug
Commercial Bank of Korea
Community Credit Cooperative
Costco
Coupang
CU
Cumberland Korea
Curve
Daegu Bank
Danal
Datacard
D-Custody
Diners Club
Discover
eBay
EFTPOS System
E-mart 24
Entrust
Expace
Export Import Bank of Korea
Expresspay
Fin2B
Financial Services Commission
Financial Supervisory Service
Fitbit Pay
FSC
FSS
G Market
GE Consumer Finance
Giro System
Gmarket
Google
Google Pay
GS25
Hana Bank
Hana Financial Group
HanaPay
Hanil
Hashed
Hexlant Custody
Homeplus
Hyundai
Hyundai Card
IBK
Iconloop
Industrial Bank of Korea
Inicis
INIpay
Interbank Shared Network Systems
International Telecommunication Union
i-ONE Bank
ITU
J Fintech
Jay Mart Group
JCB
Joint QR Pay
K Bank
Kakao
Kakao Bank
Kakao Pay
Kakao Talk
Kakao Taxi
KB Kookmin Bank
KB Kookmin Card
KB Pay
KBDAC
K-Cash System
KEB
KEB Hana Card
KFTC
Kia
KISA
KODA
Kona I
Kookmin
Korbit
Korea Digital Asset Trust
Korea Exchange Bank
Korea Financial Telecommunications and Clearings Institute
Korea Post
Korea Telecom Corporation
Korean Airlines
Korean Exchange Bank
Korean Federation of Savings Banks
Korean Internet and Security Agency
KSNET
KT
KT Corporation
Kyongnam Bank
L Pay
Liiv TalkTalk
Line Pay
Lone Star Funds
Lotte
Lotte Card
Lotte Group
Marriott
Mastercard
Maxsys
Microsoft Garage
Ministop
Ministry of ScienceICT and Future Planning
Mir
Mobiletoong
Musinsa
MyData
Naver Corporation
Naver Pay
Naver Shopping
Nexon
NHN Entertainment
NongHyup Bank
Nuance Communications
Octopus Card
OKCashBag
Paybooc
Payco
Payoneer
PT IBK
Retail Payment Systems
RPS
RuPay
Samsung
Samsung Pay
SC First
Seoul Bank
Shinhan Bank
Shinhan Card
Shinhan Pay
Shinhan Play
Shinsegae
SK
SK Telecom
Socar
SoFi
SSG Pay
Standard Chartered
Starbucks
SudoPay
System LSI
Terra
T-money Mpass
Toss
Trustonic
Tufts University
UnionPay
United Nations
Vinyl & Plastic
Visa
Viva Republica
We Make Price
WeChat Pay
Wirecard
Woori Bank
Woowa Brothers
World Bank
Zelle
Zero Pay

MORE ASIA-PACIFIC CARDS & PAYMENTS REPORTS

Reports include detailed market and competitor intelligence on payments cards, e-money, acquiring, retail banking, and consumer credit in the Asia Pacific region. Analysts use primary and secondary source data and conduct in-depth interviews with senior industry executives and finance experts.

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