KakaoTalk, a free mobile Instant messaging application, is set to foray into payments business with the launch of its own mobile payment solution, Bank Wallet Kakao, in June 2014.

Kakao, the app developer, said that it is currently undertaking final stage operations to execute a small-sum transfer service for up to KRW100,000 ($97.5) in collaboration with 15 banks and the Korea Financial Telecommunications & Clearings Institute (KFTC).

KFTC official familiar with the development told The Korean Times that if a Bank Wallet user sends money to another user, it is charged on the receiver’s mobile card.

"The receiver then can use the money for online money transactions or at offline shops having near-field communication (NFC) payment systems," added the official.

"While a sender currently uses the phone number of the receiver when sending money, with KakaoTalk, the sender will select the receiver from his or her list of KakaoTalk friends."

The charged amount can be utilized to make purchases for a range of Kakao’s services including KakaoTalk, Kakao Style and Kakao Music.

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The launch of this service is expected to revive the payments industry of the country, with citizens doing away with credit/debit cards while on out-of-town trips.

Further, the new service is expected to leverage the failures of credit card operators in expanding infrastructure for their services such as app cards and universal subscriber identity module (USIM) cards driven by limited size and conflicts of interest.

Currently, the Financial Services Commission and the Financial Supervisory Service are evaluating the security options of the service in data protection measures.