South Korea: payment cards continue to dominate image credit shutterstock

Payment cards remain the most preferred payment tool for e-commerce purchases in South Korea, collectively accounting for over half (54%) of the total e-commerce payments in 2023, signifying a strong preference for secure and convenient transactions among the online shoppers, finds GlobalData, publishers of EPI.

GlobalData E-Commerce Analytics

GlobalData’s E-Commerce Analytics reveals that the e-commerce market in South Korea grew by 10% in 2023 to reach KRW150.3trn ($115.1bn) as an increasing number of consumers shift from offline to online purchases. The market is set to increase at 9.1% to reach KRW164trn ($125.6bn) in 2024.

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Poornima Chinta, Senior Banking and Payments Analyst at GlobalData, said: “South Korea’s e-commerce market is the third largest (in terms of value) in the Asia-Pacific region and lags only behind China and Japan. It has evolved at a rapid pace in the past few years supported by the country’s robust digital infrastructure, including high internet and smartphone penetration as well as digital retail innovations such as the use of drones and robots for deliveries, AI-powered personalisation, and live stream shopping.”

GlobalData Financial Services Consumer Survey

According to GlobalData’s 2023 Financial Services Consumer Survey, around 81% of consumers in South Korea reported having shopped online in the past six months, while only 10.2% of respondents cited that they never shopped online.

Among the various payment tools, payment cards lead the e-commerce space with a combined market share of 54.3% in 2023. Among card types, credit and charge cards are highly favoured, accounting for a 48.5% share. This is due to the value-added benefits, including interest free instalment payment options, reward programmes, cashback, and discounts associated with these cards.

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However, alternative payment tools are slowly catching up with payment cards and are the second most preferred payment method for e-commerce payments. This can be attributed to the security, convenience, and comfort associated with this payment method. Alternative payments collectively account for a 32.9% share in 2023, with some of the popular brands being Samsung Pay, Naver Pay, and China UnionPay.

Cash accounted for a share of just 2% of e-commerce payments, reflecting the strong use of electronic payment methods in the country.

Chinta added: “South Korea’s e-commerce market is poised for rapid expansion in the next few years. The market is anticipated to increase at a compound annual growth rate (CAGR) of 9.2% between 2024 and 2028 to reach KRW233.1trn ($178.5bn) in 2028. Amidst their growing popularity, alternative payment methods are set to challenge the dominance of payment cards in the near future.”