Seoul launches zero-fee digital payment system
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The city of Seoul has moved to ease the transaction-fee burden on small and medium-sized businesses (SMBs) by launching the “Zero Pay” zero-fee digital payment system. The system has been set up in partnership with banks and fintech firms in response to shop owners paying excessive proportions of their monthly sales into credit-card transaction fees.
Twenty banks and digital payment firms – with the notable exclusion of KakaoPay, South Korea’s most popular mobile payment service – are participating in the zero-fee digital payment system, which is digital-wallet activated via QR codes through which money is transferred directly between bank accounts.
Businesses with annual sales less than KRW800 million (US$708,820) will not be charged transaction fees, while those with higher takings will be charged fees well below the credit card industry standard of 2.2 per cent.
“If consumers and citizens use Zero Pay whenever possible, it will be a great help for self-employed businessmen,” said Seoul city mayor Park Won-soon.
Around 16,750 stores have signed on to the Zero Pay program so far.
Questions & Answers
Q.What is the primary goal of the Zero Pay system for businesses?
What is the primary goal of the Zero Pay system for businesses?
The Zero Pay system aims to ease the financial burden on small and medium-sized businesses by eliminating or significantly reducing transaction fees. This addresses the issue of shop owners paying excessive amounts from their monthly sales to credit card fees.
Q.How does the Zero Pay system facilitate digital payments for consumers and businesses?
How does the Zero Pay system facilitate digital payments for consumers and businesses?
The system operates through digital wallets, with payments initiated via QR codes. This setup allows for direct money transfers between bank accounts, streamlining the transaction process without intermediaries for consumers and businesses.
Q.Which types of businesses will benefit most from the zero-fee structure?
Which types of businesses will benefit most from the zero-fee structure?
Businesses with annual sales below KRW800 million (US$708,820) will not be charged any transaction fees. Those with higher takings will still benefit from fees significantly lower than the standard credit card industry rate.
Q.Are all major digital payment providers participating in this new system?
Are all major digital payment providers participating in this new system?
No, while twenty banks and digital payment firms are involved, KakaoPay, which is South Korea’s most popular mobile payment service, is notably not participating in the Zero Pay system at launch.
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