Seoul Pay
Overview
Seoul Pay (서울페이) is a mobile easy-payment and local currency integrated platform promoted by the Seoul Metropolitan Government. It aims to reduce the card fee burden on small business owners and to expand the range of merchants and the convenience of the Seoul Love Gift Certificate (서울사랑상품권), the city's local currency. By combining a payment app and a local currency into one, it seeks a structure that offers citizens discounts and rewards while providing affiliated merchants with low fees.
Key Details
Background
- Card fee burden: Even with preferential rates applied, small and medium-sized merchants still bear a fee burden relative to sales, and the more payment methods concentrate on cards, the more disadvantageous the cost structure becomes for small business owners.
- Limitations of Zero Pay: Zero Pay (제로페이), introduced in 2018, touted a 0% fee, but its usage rate fell short of expectations due to app usability, a lack of points and benefits, and stalled merchant expansion.
- Fragmentation of local currency: The Seoul Love Gift Certificate grew in issuance volume in both paper and mobile forms, but because separate apps and issuing/operating institutions were divided, issues regarding the convenience of payment and balance management were continuously raised.
Key Features and Structure
- QR-based payment: The core method is one in which the user generates a QR code from prepaid balance charged in the app, and the merchant scans it to complete the payment.
- Wallet and charging features: It has a structure that includes charging via linked bank accounts, holding within a certain limit, and use exclusively for merchant payments (restrictions on cash conversion).
- Toward an integrated app: It aims to have the character of a "super app" that handles gift certificate purchase, charging, payment, balance checks, and refunds all in a single app.
- Low merchant fees: It targets fees at a low level compared to card companies (free or in the 0% range), and shortening settlement cycles and providing sales data are also under consideration.
Relationship with the Seoul Love Gift Certificate
The Seoul Love Gift Certificate is a local currency issued by the Seoul Metropolitan Government, for which a discount (typically around 5–10% depending on policy) is applied at purchase, and merchant fees are low. Seoul Pay aims to absorb this gift certificate as a payment method so that citizens can enjoy charging, payment, and benefits all at once without using a separate gift certificate app. The gift certificate discount rate and issuance scale are adjusted each year according to the Seoul city budget and government policy.
Differences from Zero Pay
Zero Pay is a QR payment network based on payment approval and settlement infrastructure such as that of the Korea Financial Telecommunications and Clearings Institute, and was closer to a "payment method" that could be used together across multiple apps. Seoul Pay, by contrast, aims to have the character of a single platform led by the Seoul Metropolitan Government, and differs in that it combines local currency charging, discounts, and payment, and utilizes payment data for local policy.
Benefits for Users and Merchants
- Users: Charging discounts, payment cashback, region-specific coupons and benefits, and income deduction systems related to gift certificates.
- Merchants: Low fees, fast settlement, sales analysis and marketing support, and the effect of attracting local customers.
- Seoul City: Support for small business owners, inducing a virtuous cycle of consumption within the region, and securing consumption data for policy formulation.
Controversies and Challenges
- Backlash from the card industry: Concerns that payment fee revenue may be eroded and disputes over fairness are raised.
- Competition in usability: It must secure an edge in usability and benefits compared to existing easy-payment services such as Kakao Pay, Naver Pay, and Samsung Pay.
- Merchant expansion: The key is to secure enough stores that accept QR payments and to design operating incentives.
- Fiscal sustainability: The challenge is whether funding for discounts and cashback and the issuance scale can be maintained stably.
- Technology and security: It is necessary to secure system stability, including personal information protection, balance management, and handling of large-scale traffic.
Latest Trends
- Push for launch and expansion in 2024–2025: The Seoul Metropolitan Government formalized its plan to promote Seoul Pay and presented a strategy to gradually expand merchants and users following pilot operation. Its character as a "successor model to Zero Pay" combining local currency and easy payment is emphasized.
- Growing share of mobile gift certificates: The trend continues in which paper gift certificates are reduced and the share of mobile issuance and payment grows, and app-based management is becoming established as the standard.
- Changes in the local currency policy environment: In conjunction with the government's reorganization of the local currency and Onnuri Gift Certificate systems and the Local Extinction Response Fund, the issuance scale, discount rates, and national subsidy support methods are highly likely to be adjusted.
- Competition in linking easy payment and local currency: Private platforms such as Kakao Pay and Naver Pay are also expanding links with local currencies and gift certificates, so Seoul Pay is required to differentiate itself in both benefits and convenience.
- Discussions on integrating local government platforms: As each local government operates its own local currency app, discussions on linking and integrating at the metropolitan and basic unit levels are also under way.
- Data and policy utilization: Attempts to utilize payment data for commercial district analysis and small business owner support policies are increasing, and governance design combined with personal information protection has emerged as a key issue.
Related Topics
- [[Zero Pay]]
- [[Seoul Love Gift Certificate]]
- [[Local Currency]]
- [[Easy Payment]]
- [[Onnuri Gift Certificate]]
- [[Small Business Owners]]