SEOUL, South Korea-South Korea’s mobile payments made for purchases of digital content or other inexpensive products may face a disruption as the Fair Trade Commission (FTC), the country’s top trade regulator, has decided to force mobile service providers to provide users with a paper copy of transactions by mail.
The Ministry of Information and Communication (MIC) said the FTC recently called for the mailing of bills for all mobile payment transactions. SK Telecom and other mobile carriers are strongly opposed to such a system, citing enormous costs.
Mobile payment is widely used for the purchase of small items or services both online and offline. As the amount of money involved is small, some analysts dub the solution a “micropayment system.”
Unlike other payment methods, such as credit cards, the mobile-phone transactions are relatively quick and easy, thereby gaining more users for buying online game personalities (avatars) and other items. A majority of online item sellers offer the so-called mobile payment system.
But the fate of the mobile payment system is now in danger as the FTC is adamant that SK Telecom and other carriers should mail bills to its users.
The FTC’s move came as the trade watchdog set up the consumer protection law in connection with e-commerce. Korea is one of the most wired countries in the world, with more than 65 percent of all households hooked to a broadband Internet network.
SK Telecom, the country’s largest mobile carrier, asked the information ministry to resolve the dispute, which could hurt mobile service providers and affiliated online shops. SK Telecom argued that the total revenue coming from its mobile payment service is about 150 billion won (US$120 million), but its transaction commission is just 3 billion won (US$2.4 million). If the paper receipts have to be issued for every small transaction, the cost will be greater than the income, making it impossible to offer such services, SK Telecom said.
Information ministry officials said the FTC’s demand goes against the general trend toward a “paperless society,” and they would try to persuade the trade regulators to give up on the forceful plan.
Ministry officials said mobile micropayment in Korea is one of the most advanced in the world in terms of core technologies and related solutions. Major mobile payment service operators have solid business models and are keen to enter overseas markets. The market, estimated at 250 billion won (US$200 million) this year, is expected to post 30-percent annualized growth rate in coming years.
