Fintech companies such as Naver Pay, Kakao Pay, and Toss are aiming to secure market share in the offline sector in the second half of the year. These companies, which focus on mobile payments to match the era of cashless transactions, have primarily concentrated on the online market but are gradually expanding into offline markets.
According to the financial industry on the 3rd, Kakao Pay recently established an alliance to enter the offline payment market from its headquarters. The alliance includes Kakao Pay, KIS Information & Communication, NICE Information & Communication, Beaverworks, OKPOS, Union, Korea Information & Communication, and Kakao. The main collaboration involves table orders based on electronic entry logs (QR codes), where payments are made using a sticker printed with a QR code.
Kakao Pay QR order merchants benefit from being able to save on expenses related to purchasing tablets or renting terminals, as only one is placed at each table. Kakao Pay is rapidly increasing its merchant base, surpassing 1.13 million merchants as of last year. In March, it launched a 'Good Deal' discount program at the time of payment, and it is currently expanding into local currency mobile payment services in the Gyeonggi region.
Toss and Naver Pay will begin intense competition in terminals starting at the end of this year. Toss was the first to introduce dedicated terminals two years ago. The Toss device, Toss Place, has been distributed in 100,000 units within just two years, surpassing a cumulative payment amount of 1.05 trillion won. Compared to the nine years it took existing terminal companies to reach just 50,000 merchants, this is a rapid increase in market share.
The reason Toss has been working hard on expanding its terminals is because of FacePay. Toss is currently piloting a facial recognition payment service called 'FacePay' at some stores in the metropolitan area. This method allows for payments to be completed in under one second simply by presenting one's face to the terminal, as Toss aims to establish it as a next-generation payment method beyond card contactless payments or QR codes.
Naver Pay is also set to launch its offline terminal 'Connect' within this year. Currently, Naver Pay is finalizing the design of Connect and developing software. This terminal will feature all payment technologies, including QR codes, magnetic secure transmission (MST), near-field communication (NFC), and face recognition-based 'Face Sign' payments. Park Sang-jin, CEO of Naver Pay, noted that they will differentiate from existing terminals by not only enabling payments but also implementing various services such as reservations, orders, and reviews.
According to the '2024 Domestic Payment Trends' report released by the Bank of Korea in March, the amount used for face-to-face payments last year reached an average of 18 trillion won per day, marking a 6.6% increase from the previous year. The proportion of face-to-face payments within total payments also remained steady at 60.1%, similar to last year's 59.9%. This is the reason why simplified payment companies, which have stabilized their online payment expansion, must now target the offline market.
Additionally, when using credit cards to make offline payments through simplified payment applications (apps), no fees are incurred, but if payments are made using prepaid credits such as Naver Pay Points or Kakao Pay Money, fees will be charged. This means that the increase in offline use will further benefit the revenues of simplified payment companies.
An industry insider noted, 'As simplified payments become as ubiquitous as cash and card payments, it is a natural phenomenon for simplified payment companies to seek to secure market share in the much larger offline segment.' They added, 'How much of the offline market is captured in the current triopoly will influence restructuring of the market and rankings.'