‘Abysmal’ start to South Korean Zero Pay pilot
The Seoul city government’s smartphone-based payment-program pilot posted an abysmal track record in its first full month of service, data showed Wednesday.
In a bid to help relieve small merchants of burdensome credit card fees, the municipality began the trial run of the “Zero Pay” service in late December, enabling users to pay for purchases card-free and receive tax benefits.
About 8600 purchases totalling 199 million won (US$177,000) were settled via the Zero Pay system in January, according to the data provided to Rep. Kim Jong-seok of the main opposition Liberty Korea Party by the Financial Supervisory Service.
The number of settlements came to a mere 0.0006 per cent of the 1.56 billion purchases made using credit, debit and prepaid cards, with the value reaching only 0.0003 per cent of the total 58.1 trillion won.
As of the end of January, slightly over 46,600 small shops and businesses were taking part in the pilot payment service.
Watchers attributed Zero Pay’s poor record to the small number of participating merchants and customers’ unwillingness to change their payment habits.
Eleven commercial banks, including all major lenders, joined the test service, which the Seoul city government plans to formally launch after this month.
Nine more banks are slated to take part in the Zero Pay system, and the municipality will recruit convenience stores and other franchise stores to join.
Under the system, money is transferred from a consumer account to that of a merchant when the consumer scans the merchant’s QR code with a smartphone using the existing apps of commercial banks or online payment platforms.
Following its formal launch, the central government plans to gradually expand the service to other parts of the country by offering tax breaks and eliminating related regulations.
* Original reporting by Yonhap, via Korea Bizwire.