SIMPLE PAYMENT SYSTEM

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The simple payment system allows a user to make payment by simply entering a code. The daily amount of such easy payment system has increased to 500 billion won. Roughly two-thirds of such payments are made through the financial affiliates of IT companies such as Naver or Kakao. However, small businessmen have to deal with a considerable amount of fees to take advantage of this payment system.

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Mr. Park imports various products including mobile phone batteries and soaps then sells them online. About half of his customers make purchases through Naver's payment system, but he stands to pay considerable fees.

[Soundbite] Park ○○(Online business owner) : "Along with inflation various costs including fees are rising considerably. It’s adversely impacting our business."

Credit card fees amount from 0.5 to 1.5% of payment amount. But easy payment systems such as NaverPay and Kakaopay charge higher fees. The two IT giants claim a simple comparison should not be made as they play the roles of both the credit card company and payment agency.

[Soundbite] Heo Jun-beom(Korea Fintech Industry Association) : "Simple payment fee includes a credit card payment fee. The rest covers the provision of a payment system needed for online purchases and the cost for sub-franchise risks."

But the actual burden felt by small businesses is much heavier. Mr. Park had signed a 'smart store' contract which gives his business better exposure on Naver search result and allows customers to pay him in bonus points. When a customer who searched for a certain product buys it or pays for it with bonus points, the seller is found to have paid 6% of the sales to Naver as an additional fee. Last year, NaverPay and Kakaopay recorded sales of one trillion won and 460 billion won respectively.

[Soundbite] Kim Deuk-ui(Head, Financial Justice) : "Platform operators take all the benefits and profits. Small businessmen have no choice but to join the high-volume system."

In May, the Financial Supervisory Service held its first meeting with simple payment service providers to find out the exact situation. But as sales management and many other issues are involved, the financial watchdog aims to officially announce the payment fee amount before the year's end instead of immediately lowering the fees.