As competition in Korea's simple payment market intensifies, Kakao Pay and Naver Pay are reinforcing their business strategies in divergent directions. Naver Pay is concentrating on external payments and securing offline data, while Kakao Pay is focusing on financial services such as investment and insurance.
According to Naver on Wednesday, Naver Pay (Naver Financial) recorded 24.2 trillion won in first-quarter payment volume, up 23% from a year earlier. Payment volume for all of last year reached 86 trillion won. The possibility of surpassing 100 trillion won in annual payment volume this year has also been raised.
Growth in external payment volume stands out in particular. External payment volume came in at 13.5 trillion won, up 33% year-on-year. Over the same period, external payments accounted for 56% of total payment volume, more than half.
Naver Pay is pursuing an integrated online-offline payment platform. In November last year, it launched "NPay Connect," an integrated offline terminal. The company is connecting online search, reservation, and review data with offline order, payment, coupon, and loyalty data through its platform. Based on this, the strategy is to deliver value to both business owners and consumers.
Naver Pay is also focusing on expanding its offline merchant base. Since March, through a partnership with Retail & Insight, it has installed Connect terminals at more than 4,000 marts nationwide. In addition, it has partnered with the Seoul Credit Guarantee Foundation and Hana Bank to offer guaranteed loans to small business owners who install Connect.
Kakao Pay, by contrast, appears to be placing greater weight on strengthening its role as a financial platform. Kakao Pay's financial services operating revenue in the first quarter came to 145.9 billion won, up 82.0% year-on-year. Its share of total operating revenue also expanded to 49%.
Kakao Pay's financial services include investment, insurance, and lending. Kakao Pay Securities, benefiting from the stock market boom, saw its custodial assets grow 208% year-on-year to 13 trillion won at the end of the first quarter. Net inflows alone reached 3.7 trillion won over three months.
Insurance also continues to expand its customer base. Kakao Pay Insurance has introduced more than six new products from last year through the first quarter of this year. In particular, it expanded its lineup of regular premium products, including children's insurance, jeonse and monthly rent insurance, and pet insurance. As a result, regular premium income in the first quarter reached 6.6 billion won, up 157% from the same period last year. Kakao Pay is also expected to play a pivotal role within its group if a won-based stablecoin is introduced in the future.
The industry views that, with the simple payment market entering a mature phase, securing profitability through payment fees alone faces growing limits. This is why analysts say operators are shifting their strategies to extend payment into financial services, commerce, advertising, and data businesses. "Competition has intensified since the introduction of Apple Pay, and the burden of marketing costs and loyalty point accruals has also expanded," a financial industry official said.
