Credit cards account for 46% of transactions, leaving little room for QR adoption

Toss's face-pay service tops 9 million subscribers with a 65% repeat-use rate

Fintechs counter with 10% rewards and a fierce race to install payment terminals

[Image generated with ChatGPT]
[Image generated with ChatGPT]

QR-based payments, now a daily routine across China and Southeast Asia, have failed to gain traction in South Korea. A dense credit card network, generous discount and rewards programs, and the growing ease of tap-to-pay have given consumers little reason to change how they pay. Into that gap, facial recognition payment services are now pushing hard — leading with rewards and the promise of checkout without ever pulling out a phone. Whether face-pay can crack a market built around cards is the question the industry is watching.

According to a payment trends report the Bank of Korea released last month, the daily average transaction value for payment cards in the first half of this year reached 3.78 trillion won ($2.82 billion), up 7.6 percent from the same period a year earlier. The figure covers personal and corporate credit cards, debit and cash cards, and prepaid cards.

Credit cards also dominated by transaction count. In 2024, credit cards accounted for 46.2 percent of all payment transactions, far ahead of debit cards at 16.4 percent, cash at 15.9 percent, and mobile cards at 12.9 percent.

QR payments in South Korea, by contrast, have largely been confined to policy-driven instruments such as Zero Pay and Onuri gift vouchers. Analysts say the format — which requires scanning a code or manually entering an amount — has offered consumers no clear advantage in a country where card terminals are already ubiquitous.

Data bear that out. An analysis of payment records at a domestic convenience store conducted by the Korea Financial Telecommunications and Clearings Institute in 2023 found that tap and insert card payments accounted for 96.58 percent of transactions, while QR payments were limited to 3.42 percent. Figures submitted to the National Assembly by the Ministry of SMEs and Startups showed that about 64 percent of the roughly 1.83 million Zero Pay merchants registered in 2023 recorded no transactions at all that year.

Behind the slow spread of QR payments lies South Korea's mature credit card industry. The card network reaches virtually every merchant, and a wide range of perks — discounts, reward points, installment plans — leave consumers with little incentive to switch. The ability to pay simply by tapping a smartphone loaded with a card also erodes whatever convenience edge QR might otherwise offer.

Analysts say the expansion of such card-linked mobile payments also helped push card spending growth to its highest rate in three and a half years in the first half of this year.

Fintech companies challenging the card-dominated market are now focusing on facial recognition payments. The pitch is convenience: no app to open, no code to scan — just look at a terminal and pay. The strategy pairs that ease with rewards programs designed to shift consumer habits away from cards.

"The monthly repeat-use rate — the share of customers who used face pay last month and used it again this month — is above 60 percent," an industry official said. "Once customers experience the convenience firsthand, they keep coming back."

Naver Pay entered the market first, but Toss has been expanding its user base rapidly through aggressive terminal deployment and marketing. Toss's face-pay service, called Face Pay, surpassed 9 million cumulative subscribers this month, up more than 2 million from the 7 million the company disclosed in September. Toss Place is also building out its workforce, running a three-digit open recruitment drive across all job categories through the end of this month.

The race to sign up merchants is intensifying as well. Naver Pay said it grew the merchant base for its Npay Connect payment terminal — launched in November last year — from 48,000 locations in March to 100,000 in June. The number of merchants with Toss Front terminals installed expanded from 300,000 in March to 400,000 in June and 500,000 in September.

Both companies are also sweetening their rewards. Naver Pay is offering 10 percent back on Face Sign transactions, up to a maximum of 50,000 won per month, through the end of November. Toss, which has been running discount promotions at GS25 and other retailers, is giving customers who use Face Pay for the first time this month up to 5,000 points.


snsd@heraldcorp.com