South Korea holds an influential role in the global payment sector. With its tech-savvy population and use of cutting-edge technology, it boasts one of the highest internet penetration rates globally at nearly 98%. This digital dominance is reflected in customers’ preference for digital wallets and online banking.

Below, we’ll explain what businesses that plan on entering the South Korea payment system should understand, including:

• Adhering to local preferences
  
• Guaranteeing strong data privacy
  
• Providing a quality customer experience
  

The state of the market

South Korea’s payment market is experiencing a digital shift, even as it maintains its traditional roots. The nation’s Financial Services Commission (FSC) strikes a balance between promoting improvement and ensuring consumer protection, and initiatives such as the Financial Investment Services and Capital Markets Act help South Korea remain a leader in payment technologies.

The Korea Financial Telecommunications & Clearings Institute plays an important role in facilitating electronic transactions. These interbank transactions have been instrumental in the development of electronic payments, including the country’s real-time gross settlement system. Electronic payment methods—including local fintech payment options, QR code payments, and mobile wallets—have experienced widespread popularity with customers.

Payment methods

South Korea’s forward-looking regulatory environment has promoted the use of digital and electronic payments, but cash still plays an important role for certain sectors.

Current usage

Credit cards remain a popular payment method, with credit card payments expected to grow to almost $891 billion in 2026. The country has also seen an exponential rise in mobile and online payments. A 2023 survey, for instance, found that over 60% of ecommerce was conducted through smartphones.

Loyalty programs and rewards are a defining feature of the credit card market in South Korea. These programs often extend beyond cash back or points accumulation to include discounts on public transport, fuel, or cultural events. Card issuers collaborate with a spectrum of businesses, from entertainment venues to grocery stores, allowing cardholders to take advantage of a wide variety of benefits and incentives.

However, many South Korean customers still use traditional payment methods: cash accounted for almost 16% of all transactions in 2024. Automated teller machines (ATMs) that are integrated with digital banking services are common, serving as both cash dispensers and digital transaction points.

The Bank of Korea, South Korea’s central bank, continues to print and distribute banknotes while promoting a “coinless society” initiative that encourages customers to deposit loose change into prepaid cards. Additionally, the tactile experience of cash remains important, especially for cultural events such as Lunar New Year, when it’s customary to give gifts of cash in envelopes.

Popular B2C payment methods in South Korea

• Credit cards
  
• Local mobile payment apps (e.g., Kakao Pay, Naver Pay, Toss)
  
• International payment apps
  
• Direct bank transfers
  
• Cash
  

Popular B2B payment methods in South Korea

• Credit and debit cards
  
• Direct bank transfers
  
• Electronic and internet giro methods
  
• Ecommerce payment providers
  

Emerging trends

South Korea has witnessed a major shift toward mobile payments, driven by a tech-savvy population and substantial digital infrastructure. In 2023, digital wallets accounted for 49% of all online transactions. This trend is rooted in the nation’s proactive integration of technology into everyday life.

The use of local mobile wallet options like Naver Pay and Kakao Pay also demonstrates this widespread acceptance. Kakao Pay was the first to offer mobile payments services to Korean customers and is an offshoot of the widely used messaging app KakaoTalk. Kakao Pay also offers features such as money transfers, bill management, and financial products including insurance, exemplifying how deeply integrated mobile payment solutions have become in daily life. Its range of features and alignment with the Kakao brand have contributed to its widespread adoption: Kakao Pay had 24 million active users in 2024.

Ease and friction of entry

South Korea is known for its interconnected financial system. Customers frequently buy from foreign companies, and outside entities can operate in and benefit from its global economy. Here’s what businesses should remember when they consider expanding to South Korea.

Taxes

The standard value-added tax (VAT) rate in South Korea is 10% and is integrated into the prices of goods and services for customers. Businesses must collect VAT from sales and forward it to the government.

Chargebacks and disputes

The Electronic Financial Transactions Act generally places the burden of proof on financial institutions in the event of a dispute. If a customer raises a chargeback claim for an unauthorized transaction, the institution must verify and prove the transaction’s legitimacy. Unless the card company can prove the customer’s gross negligence, it must reimburse them for unauthorized card transactions.

International payments

South Korea has a mix of traditional institutions, modern fintech solutions, and entities that do business abroad. Here’s what to consider for international payments.

• Currency conversion
  South Korea’s digitization extends to currency conversion, and several mobile apps and online platforms facilitate the process. Beyond traditional banks, platforms like Sendbird and PayGate offer specialized solutions for businesses and individuals, simplifying cross-border transactions and ensuring competitive conversion rates. Their services range from currency conversion to facilitating international wire transfers with minimal fees. The Financial Supervisory Service oversees currency conversion in South Korea, ensuring transparency and fairness in the market. Regulations mandate that all costs associated with currency conversion, including service fees and the markup over the interbank rate, be disclosed to customers.

• Kakao Pay
  Kakao Pay, with its broad set of financial services, allows users to convert currency and send money abroad with minimal fees. Additionally, in 2023, it saw a huge jump in its user base outside Korea: foreign users made 14 times more monthly transactions compared with the previous year, including in China and Thailand.

• Global trade
  South Korea’s payment sector shares many features with that of China, its largest trading partner, especially regarding ecommerce and mobile payments. A 2015 bilateral trade agreement between the two countries has further spurred the exchange of goods, services, and payment technologies.

Security and privacy

Data protection is paramount in South Korea’s payment system. Here’s a closer look at how payments are secured.

• Data protection laws
  South Korea’s Personal Information Protection Act is one of the strongest data protection laws in the world. It mandates that organizations obtain explicit consent from individuals before they collect and use their personal data. Companies must notify users about the purpose of data collection, giving customers full clarity on how their information is used.

• Strong Customer Authentication (SCA)
  Much like the European Union’s revised Payment Services Directive (PSD2), South Korea’s laws emphasize SCA in transactions. Many of the country’s online transactions require at least two forms of authentication, which can range from passwords and personal identification numbers (PINs) to biometric data. This type of rigorous authentication can sometimes reduce the number of disputes, as multiple verification layers provide additional security checkpoints.

• FSC
  The FSC regulates and oversees the financial industry in South Korea. It sets guidelines, supervises financial institutions, and implements measures to improve industry stability. In 2020, the FSC introduced new guidelines to better protect users of electronic payment methods, boosting customer confidence in noncash methods.

• Electronic Financial Transactions Act
  This law governs electronic financial transactions and ensures that financial institutions maintain secure and stable processes. It focuses on safeguarding customer rights and preventing financial crimes.

• Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures
  South Korea enforces strict AML and CFT measures. Financial institutions are obligated to perform thorough customer due diligence, report suspicious transactions, and maintain comprehensive records of their customers’ financial activities.

• Cybersecurity
  The Korea Internet & Security Agency (KISA) leads the country’s cybersecurity initiatives. KISA establishes cybersecurity policies, conducts regular audits, and responds to cyberincidents.

• Consumer protection
  South Korea’s Financial Consumer Protection Act requires financial service providers to operate transparently and give customers clear information about the services they use. It also provides guidelines for addressing customer complaints and disputes.

Key success factors

Here’s what you should remember as you formulate strategies for conducting business in South Korea.

• Disparities in digital adoption
  Even with South Korea’s tech-forward position, certain demographics have been slower to transition to digital payments. In 2023, over 73% of South Koreans used mobile banking services. However, older generations are less likely to bank digitally and this disparity calls for solutions that cater to tech-savvy customers as well as older generations still accustomed to traditional banking methods.

• Protection against advanced cybersecurity threats
  Given South Korea’s technological advancements, the frequency and sophistication of cyberattacks have grown. More than 230,000 cybercrime cases were reported to the police in 2022. Payment providers and financial institutions are investing considerably in enhancing their cybersecurity measures to mitigate potential breaches.

• Strong customer security
  Although fraud and dispute rates remain lower than those of other large markets like the United States, they have been rising with the increased use of digital payments. According to a 2025 survey, 44% of South Koreans encountered a scam in the past 12 months and 26% fell victim to one. Businesses must find a way to balance consumer protection with an easy transaction experience.

Key takeaways

Payments in South Korea can take many forms. Businesses that want to enter this market should be aware of local preferences, guarantee data privacy, and prioritize flexibility and security to appeal to customers. Here’s an overview for creating and executing your business plan in South Korea.

Adhere to local preferences

• Prioritize digital payments platforms
  South Korea’s payment space is heavily digital, and local platforms like Kakao Pay and Naver Pay enjoy widespread popularity. Businesses that integrate with these platforms can tap into a significant user base that favors quick, app-based payments.

• Integrate with local bank payment gateways
  South Koreans often choose direct bank transfers when they shop online. Supporting direct transfers from major banks like Shinhan, KB Kookmin, and Woori can simplify the payment process for many customers.

• Payment flexibility
  Installment payments—or “halbu,” as they’re called locally—are popular among South Korean customers, especially for high-value purchases. By offering flexible installment options, businesses can cater to customers who want more control over their cash flow.

Guarantee strong data privacy

• Customer privacy
  The Personal Information Protection Act mandates rigorous data protection standards. Businesses that adhere to these regulations and prioritize data security can earn customers’ trust, leading to increased loyalty and repeat business.

• Secure mobile payments
  South Korea has one of the highest mobile phone penetration rates in the world, and mobile commerce accounts for more than 76% of all ecommerce transaction value. Offering payment methods that are refined for mobile can significantly improve user experience, but businesses should deploy security programs that account for the particular risks of phone payments.

• Payment Card Industry Data Security Standard (PCI DSS)
  Businesses that handle card transactions in South Korea must comply with PCI DSS. This global standard signifies to customers that a business takes payment security seriously.

Provide a quality customer experience

• QR code payments
  QR codes have gained traction in South Korea, especially after the government launched the Zero Pay initiative. This encourages QR code transactions by offering customers discounts when they use them. Incorporating this payment mode can cater to customers who prioritize convenience and speed in transactions.

• Cross-border considerations
  For businesses with international customers, understanding the exchange rate policies of the Bank of Korea can help in offering competitive pricing and reducing the costs associated with foreign currency transactions.

• Support and assistance
  Customer support, especially after a purchase, plays a pivotal role in the South Korean market. Implementing live chat options or offering immediate assistance can help address any payment-related concerns promptly, leading to a more satisfactory payment experience.