When it comes to going global, South Korea is a country that's hard to overlook. The blockbuster game PUBG, developed by the local developer Bluehole, has swept the world. Culturally, it is part of the East Asian cultural sphere. From the era of web games to that of mobile games, domestic developers' enthusiasm for entering the South Korean market has always been high.
Overview of South Korea's Economy and Internet Development
South Korea's economy is one of the world's major economies, a member of the Organisation for Economic Co-operation and Development (OECD), and one of the Four Asian Tigers. With a per capita GDP of $34,800, it is one of the seven countries in the global "5+3" club (countries with a population of over 50 million and a per capita GDP of over $30,000). South Korea has a highly developed internet infrastructure, with a global smartphone penetration rate of 94%. Social media usage stands at 89.3%, which is 1.7 times the global average (53.6%), making it the highest in Asia and second only to the United Arab Emirates (with a penetration rate of 99%).
The most popular social media platforms in South Korea currently are: KakaoTalk, Facebook, Twitter, and LINE.
Despite the rapid development of South Korea's digital economy, the payment sector, as one of the digital infrastructures, has had a more challenging journey. This article will take you through the development history of traditional card payments and online payments in South Korea, focusing on the current environment for going global and analyzing the mainstream payment status to provide you with insights for entering the South Korean market.
A Brief History of Payments in South Korea
The Post-Credit Card Crisis Era: Card payments, as the most common payment method in South Korea, can cover almost all users in the country and are one of the preferred payment methods for local consumers.
The history of card payments in South Korea dates back to 1978 with the introduction of Visa cards. At that time, the issuance conditions were strict, and the usage rate was low. With economic growth and an increase in national income, the number of credit cards issued gradually increased. In 1987, South Korea enacted the "Credit Card Business Act," stipulating that "financial institutions" meeting certain conditions could issue credit cards after government approval.
By 2002, the average South Korean held nearly six credit cards, and the market size was growing at a rate of nearly 30% per year. The rapid increase in credit cards and consumer finance, such as small loans, laid the groundwork for the subsequent "credit card crisis."
From 2003 to 2005, the misuse of credit cards in South Korea led to a concentrated outbreak of defaults, increasing the rate of bad debts and accelerating the restructuring of the credit card industry. One advertisement that reflected the credit card consumption craze of that time was by LG Card, which featured the famous actress Lee Young-ae. In the commercial, she used a credit card for purchases and promoted it as a symbol of a fashionable lifestyle.
Since then, the use of credit cards has grown steadily, reaching 600 trillion won in annual usage by 2017.
In South Korea, credit card payments dominate card payments. According to data from the PayerMax Research Institute, in the gaming sector, a higher proportion of big spenders use card payments for game recharges. PayerMax currently covers 95% of local bank payment methods in South Korea, facilitating players to complete game recharges with a single click.
