Fast inroads into the South Korean financial realm by big-tech names Naver and Kakao backed by simple payment on their widely used platform are threatening existing players as the platform operators are so far untouched and unrestrained by existing regulations.

The most widely used platforms for internet search, shopping and chat Naver, Coupang and Kakao registered combined 66 trillion won ($59 billion) on their pay system, accounting for 88 percent of platform-based payment turnover of 75 trillion won and about 40 percent of 164.4 trillion won in total digital payment that includes servicing by banks, credit cards and mobile phone operators last year, various data showed.

According to data from Financial Supervisory Service obtained by Rep.Yoon Chang-hyun of the People Power Party, settlement count with Naver Financial reached 898 million worth 30.6 trillion won last year, compared with its humble beginning of 3.5 trillion won in November-December in 2019. Naver Financial was spun off in November 2019.

Naver is followed by Coupang Pay exclusive devoted to its e-commerce platform Coupang with settlement turnover at 25 trillion won last year.

The two expanded fast in line with the explosive growth of their online shops and merchandizing due to simpler access and payment over other payment options.

Kakao Pay is catching up fast thanks to its sprawling businesses on the chat platform almost all Koreans use at home and abroad. Last year, it handled 594 million transactions with volume totaling 10.7 trillion won, up 69 percent from the previous year.

According to the Bank of Korea, transactions of digital pay operators, which includes Viva Republica (Toss), eBay Korea (Smile Pay), SSG.com (SSG Pay), and Lotte Members (L Pay) reached 75.1 trillion won last year.

Simple payment turnover at traditional financial institutions like banks and card issuers stood at 50.1 trillion won, and mobile platforms run by mobile phone makers like Samsung Pay 39.2 trillion won.

Naver, Coupang, and Kakao took up nearly 40 percent of 164.4 trillion won worth digital payment transactions last year.

Almost all companies are racing to broaden their footprint in the immense digital pay market.

Naver joined hands with Shinsegae Group in a stock swap deal. Kakao is also eying to buy mobile shopping app Zigzag.

Big tech firms are pushing their way into the financial zone beyond pay system.

Naver partners with Mirae Asset Capital for a loan service for small businesses. It also plans to offer loan brokerage services through Woori Bank. The tech company is also considering offering non-bank credit bureau service.

Kakao Pay, which is going public this year, will also launch digital non-life insurance service this year in addition to Kakao Pay Securities last year.

By Lee Sae-ha and Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]