South Korean Government is planning to connect Zero Pay, which is a payment service with zero fees for small businesses, with Alibaba’s Alipay and Tencent’s WeChat Pay to promote consumption of local businesses by attracting 6 million Chinese visitors. South Korean Government is also planning to convert $1.78 billion (2 trillion KRW) worth of Onnuri gift certificates, $267 million (300 billion KRW) worth of local gift certificates, and private bookstore gift certificates into Zero Pay points. It has set up plans to pay some of welfare points for government employees through Zero Pay points and to use Zero Pay points for promoting tasks of public institutions.
The Electronic Times exclusively obtained an official document of ‘Measures for Operating and Establishing Zero Pay Platform’, which is expected to be enforced by Ministry of SMEs and Startups (MSS) and Seoul-si by the end of this year.
These measures not only include ways to vitalize Zero Pay but they also include detailed information on roles for main agents of Zero Pay and payment and calculation process. It is heard that measures for operation were established by Korea Financial Telecommunications & Clearings Institute (KFTC) and reported to government departments. KFTC, which has financial joint network, was selected to establish and operate Zero Pay platform.
According to South Korean Government and financial industries, a task force for pushing Zero Pay project that includes MSS, Seoul-si, and Financial Services Commission (FSC) will be in operation by end of this month. KFTC was selected as the business that will establish Zero Pay platform, stipulated detailed operation measures, and started discussions with financial circles.
According to measures for operating and establishing Zero Pay platform, relevant institutions are planning to link Zero Pay with Alipay and WeChat Pay too innovate Zero Pay’s system.
About 6 million Chinese visit South Korea annually and most of them use Alipay and WeChat Pay to make payments in South Korea. MSS is planning to connect stores that support Zero Pay to these Chinese platforms to promote consumption of local businesses. Although this plan is positive from a standpoint of versatility and convenience, some believe that South Korean Government will be dependent on Chinese businesses if it plans to link Zero Pay with Chinese platforms.
Along with 40% of deduction benefit, South Korean Government is also planning to tie Zero Pay to various gift certificates. First, it is planning to convert $1.78 billion worth of Onnuri gift certificates, $267 million worth of local gift certificates, and private bookstore gift certificates into Zero Pay points. It also set up a plan to pay welfare points for government employees and costs for promoting tasks of public institutions with Zero Pay points.
South Korean Government is going to set a certain date every month and provide 10% discount when paid with Zero Pay on those certain dates to encourage small businesses from using Zero Pay. It has decided to set up various promotions such as special discounts, accumulation of points, and prize lotteries along with local government groups. For example, they are going to designate a bakery day and a flower day and provide huge discounts to consumers on those days.
Credit payment function, which caused controversy in the past, will be revisited with FSC. South Korean Government is planning to set upper limit of credit payment service at $267.50 (300,000 KRW) monthly after discussing with FSC and relevant departments and it is looking to introduce credit payment service with identical range as hybrid check card and deferred transportation card. However, requirement of this service is to have a main bank account as a withdrawal account.
South Korean Government also included a plan to use blockchain to prevent hacking in its medium to long-term plan. It is planning to establish a plan that will encode information of local businesses and linking such information to blockchain.
South Korean Government is also going to introduce NFC (Near Field Communication), sound wave, and biometrics (iris, fingerprint) methods and it has decided to develop Zero Pay through open-source (library) so that Zero Pay can be applied with the technologies of future.
“It is very meaningful from the fact that a plan for implementing Zero Pay has been materialized.” said a representative for a financial company that is participating in Zero Pay project. “Because schedules are tight, there is a high chance that many of KFTC’s bank wallet infrastructures will be borrowed.”
Staff Reporter Gil, Jaeshik | osolgil@etnews.com