Payment cards were most preferred payment tool for e-commerce purchases in South Korea and accounted for 60.9 percent of payments made for online purchases in 2022, reveals the financial services consumer survey by GlobalData, a data and analytics company.
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An analysis of GlobalData’s E-Commerce Analytics shows that the South Korea e-commerce market was estimated to grow by 13.4 percent in 2022 to reach KRW 138 trillion (USD 115.9 billion), as consumers increasingly shift from offline to online purchases. The market is set to increase at a compound annual growth rate (CAGR) of 9.7 percent between 2022 and 2026 to reach KRW 199.6 trillion (USD 167.7 billion) in 2026.
Ravi Sharma, Lead Banking and Payments Analyst at GlobalData, comments: “South Korea’s e-commerce market is among the most developed in the world, supported by the country’s robust technology infrastructure, which ensures the availability of high-speed internet, rising smartphone penetration, high urbanisation, and growing number of tech-savvy customers. Furthermore, the Covid-19 pandemic has accelerated the trend with rapid shift in consumer preference from brick-and-mortar to online channel.”
According to GlobalData’s 2022 Financial Services Consumer Survey, over 80 percent of the Korean consumers shopped online in the past six months while only 10 percent indicated never shopping online.
E-commerce payments in South Korea have traditionally been dominated by payment cards with credit and charge cards alone accounting for a 53.2 percent share in e-commerce payment value in 2022. This is due to the value-added benefits, including interest free instalment payment options, reward programs, cashback, and discounts associated with these cards.
Payment cards are followed by alternative payment tools which collectively accounted for a 27.3 percent share in 2022 – up from 15 percent in 2020. Alternative payment solutions such as Naver Pay, Samsung Pay, Kakao Pay and SmilePay are popular among the online shoppers.
Bank transfers are also used for e-commerce payments due to convenience and secured payment experience the payment method offers. However, its share has declined from 12.7 percent in 2021 to 8.4 percent in 2022 due to growing preference for cards and alternative payment tools.
Sharma concludes: “Alternative payments are increasingly being embraced by Korean consumers for online shopping, a trend that is prevalent in many Asian markets. However, they still have a long way to go to challenge the dominance of payment cards.”