KakaoPay ultimately decided not to participate in Zero Pay project by South Korean Government.
It came to suck conclusion as it could not accommodate zero commission system presented by South Korean Government. On the other hand, Ministry of SMEs and Startups (MSS), which is the department in control of this project, has stuck to its position that it cannot accommodate QR system that KakaoPay already established. Although KakaoPay and MSS are trying to avoid immediate conflict by saying that they are looking into whether KakaoPay will participate in actual Zero Pay service, some say that it will take awhile for zero commission system to be applied to South Korean markets.
According to industries, KakaoPay decided not to participate in a pilot project of Zero Pay that is expected to take place in December.
Indication for this decision was shown early on. Before KakaoPay contemplated about participating in this project, it already established its QR infrastructure for about 100,000 franchise stores. However, MSS prohibited participants from combining their QR system with Zero Pay service.
Although KakaoPay and MSS had been making negotiations, MSS ultimately decided not to allow individual QR systems besides comprehensive QR systems. As a result, KakaoPay’s QR system will not be linked to Zero Pay service and KakaoPay decided not to participate in a pilot project of Zero Pay. It is also unclear whether it will participate in actual Zero Pay service.
Although MSS and KakaoPay agreed on expanding QR infrastructures, zero commission system ultimately impeded MSS and KakaoPay from coming to an agreement. KakaoPay believed that its QR infrastructure would become useless if it participates in Zero Pay service under zero commission system and that its business would not be effective since it would not receive commission from payments.
On the other hand, MSS and Seoul-si have decided not to favor a particular participant while pushing for Zero Pay project.
“Goal of Zero Pay service is not to receive any fee from small companies and KakaoPay is telling us that it is difficult for them to ditch its current model that brings in its revenue.” said a representative for MSS. “We will be making a discrimination if we accommodate KakaoPay’s QR infrastructure while other participants are sharing their franchise stores.” Also, MSS is expecting that there will be a huge setback if it does not follow South Korean Government’s policy.
“About 150,000 franchise stores and 25 million people are using our service.” said KakaoPay. “After looking at Zero Pay from many angles, we have decided not to participate in a pilot project of Zero Pay. However, we will be open to participating in actual Zero Pay service and look for many different ways.”
“Participation in Zero Pay project is solely on a particular company.” said a representative for MSS. “If a particular business agrees to an official ‘QR code standard’ decided by Financial Services Commission, it is allowed to participate in Zero Pay project.” MSS also said that KakaoPay can provide its 100,000 QR codes on its own and participate in Zero Pay project in the future by conforming future QR codes to MSS’ standards.
However, a setback is expected with an initial phase of Zero Pay project as the biggest participant decided not to participate in a pilot project.
South Korean Government is claiming that there will not be any problem with enforcing Zero Pay project by end of this year even when KakaoPay decided not to participate in it.
18 commercial banks and 10 simple payment providers announced that they would be participating in a pilot project of Zero Pay.
Staff Reporter Gil, Jaeshik | osolgil@etnews.com & Staff Reporter Park, Jungeun | jepark@etnews.com