A fierce competition is underway between the financial sector and the big tech industry to secure the Alpha generation (born after 2010) as future customers. In particular, products focused on the smartphone use of the Alpha generation are being rolled out one after another.
A typical product is the 'youth electronic wallet.' Unlike opening an account or issuing a card, it is a service that assists with basic payments or remittances without parental consent. It has gained popularity as it allows service access merely through identity verification.
However, concerns have been raised that youth may be exposed to financial crimes since parental consent is not required. There are calls for criminal prevention efforts from financial authorities and financial companies.
According to the financial sector on the 18th, Kakao Pay recently launched a financial service called 'Teens Number' specifically for teenagers aged 14 to 18. Teens Number allows teenagers without bank accounts to use Kakao Pay money only with mobile phone verification. While it is similar to typical financial services in that it enables remittance and payments, its strength lies in the fact that it does not require parental consent.
Generally, teenagers must go through parental consent procedures to open a bank account or even receive a debit card. However, for prepaid electronic payment methods like electronic wallets, they can sign up just with identity verification through their own mobile phone, as they do not constitute real accounts. Examples include Kakao Pay's 'Teens Money,' KB Kookmin Bank's 'KB Star Teens,' and Woori Bank's 'Woori Tintin.'
This is because, with the spread of digital devices, the Alpha generation is emerging as an important customer in the financial market, prompting financial companies to secure future customer bases. As electronic wallets become widespread, the younger generation has become accustomed to mobile payments like pay, instead of cash.
A Kakao Pay representative noted, "Teenagers have independent needs for managing pocket money and consumer behavior, which is why we devised a financial service that can be used without parental consent."
The issue is that youth financial services may stray from their original purpose. In fact, the 'Kakao Bank mini' card, a leading youth product in the country, has been pointed out several times due to instances of abuse in the second-hand market. Since the mini account can be easily created with mere identity verification, it has been used for fraudulent accounts, and because it is not legally recognized, there are limitations in applying for victim recourse even if one becomes a victim of financial crime.
In response, Kakao Bank reduced the usage limit for the mini card in June. The daily usage limit for those aged 13 and over was lowered from 300,000 won to 200,000 won, while the monthly limit decreased from 2 million won to 1 million won. Additionally, for those aged 7 to 12, the daily limit was reduced from 150,000 won to 100,000 won, and the monthly limit decreased from 1 million won to 500,000 won.
However, other financial institutions see this as an opportunity. Some have set daily payment limits as high as 500,000 won. By institution, this includes ▲ KB Star Teens (daily 300,000 won, monthly 2 million won) ▲ Woori Tintin (daily 500,000 won, monthly 200,000 won) ▲ Toss Youth Card (daily 500,000 won, monthly 200,000 won) ▲ K Bank High Teen Card (daily 500,000 won, monthly 200,000 won).
Experts emphasize that financial institutions should not only strengthen their own security to prevent side effects related to youth services but also make efforts in education. Since youth financial services are more about investing in future generations rather than immediate revenue generation, the social role they play must also be considered.
Professor Gu Jung-woo of Sungkyunkwan University stated, "It is very important for teenagers to understand finance better and to manage their money independently, so financial institutions or platform companies providing services should fulfill their social responsibility by enhancing youths' financial literacy."
Kim Kyung-ah, reporter