South Korea’s Central Bank Makes Mobile Payments Push
Mobile payments can be a great thing, but sometimes, setting them up can be a bear. Whether it’s businesses trying to bring them in or providers trying to offer new solutions, most every mobile payments development we see is the result of a whole lot of time, effort, and expertise. Some measures are coming online to make mobile payments easier to work with, and one of the latest such moves comes from South Korea’s central bank, which is planning to roll out a new mobile cash card settlement service.
The move is designed to make mobile payments simpler to work with, and thus, expand its reach throughout the country. Mobile payments haven’t exactly been a laggard in South Korea as it is—somewhere around $1.7 billion US on average every day was placed on credit and debit cards last year—but much of that wasn’t done through bank-issued cards.
That was likely part of the impetus that led the central bank to work with local banks to establish a slate of technology standards, as well as a mobile application, that allowed users to directly access a bank account and use the cash contained therein as a way to pay electronically. This will likely prove helpful, especially given the state of credit card fees in the country. Swipe fees are an average of 2.1 percent for credit cards, and 1.6 percent for debit cards with as much as one percent on cash cards. The new system, meanwhile, should help merchants work around those fees.
Basically, the Korean central bank is trying to make cards easier to work with, and potentially reducing fees. This may not sit well with established card businesses, who will likely lose at least a little business this way, but it might also spark some new competition in the region. That’s good for the customer base, and helps them branch out, so it’s worth considering. It also forces innovation on the other firms in the market, which can actually be helpful in terms of taking newly-minted competitive advantages to other markets.
It will be interesting to see how South Korea’s new program works out. It’s already pretty heavily into mobile payments, so this could be a catalyst to push things even further.