S.Korea’s global online market becoming increasingly isolated

Posted on : 2010-02-20 14:23 KST Modified on : 2019-10-19 20:29 KST
The KCC chairman says S.Korea will soon align itself with global standards of smartphone payment regulations to strengthen international competitiveness
 restraining South Korea‘s online market and online banking.
restraining South Korea‘s online market and online banking.

South Korea is growing increasingly isolated in the global electronic transactions sector as a result of financial authorities’ insistence upon mandatory measures for smartphones to adopt an accredited certificate system for credit card payments. Not only does Microsoft’s “Active X,” which issues the accredited certificates, not work on mobile devices such iPhone, but also due governmental institutions’ insistence on a specific technology, competition is not taking place and South Korea is being ignored in the global online transaction market.

The Financial Supervisory Service (FSS) informed credit card companies on Feb. 8 of its guidelines for smartphone card payments. It called for the protection of input information, virus and malware protection and encryption, and made mandatory the use of accredited certificates when making payments of 300 thousand Won ($260 USD) or more. As a result, online bookstores Aladdin and Yes24 had to suspend their new card payment system to confirm purchaser information via text message rather than the accredited certificate for iPhone users. Samsung Electronics’ recently released e-book reader SNE60k came equipped with a function to download Kyobo Book Center’s e-book content using a wireless LAN without plugging the devise into a PC, but the new regulations have rendered the service impossible. It can purchase and download content wirelessly like the Amazon Kindle, but this is because it uses a credit card system that does not use an accredited certificate. Because an e-book reader does not have a web browser, it is impossible to obtain an accredited certificate.

The electronic transaction and Internet banking regulations, which force users to use specified technology, are far from following the latest digital technology, but rather amplify the inconvenience to users and businesses. It is becoming a barrier blocking South Korea’s technological development and entry into the world market. In the 1990s, South Korea built a high-speed Internet network early on and popularized Internet banking and online shopping, but with a lack of technological progress, it is lagging behind in the mobile Internet era, in which smartphones and e-book readers are quickly increasing in number.

On the other hand, most nations use the U.S.’s PayPal system and AliPay of China, with heated competition taking place in the online transaction market. PayPal, which allows users to conduct small transactions using an email account, credit card and bank account information, is the world’s largest electronic payment method and used in about 200 countries. AliPay sees over 146 million dollars of transactions daily, centered on Chinese merchants worldwide. AliPay has received help from the Chinese government’s policy to spread the Yuan, but it is also a convenient and safe global electronic payment system that supports multiple browser environments and escrow systems. South Korea’s domestic accredited certificate system via Active X, however, has absolutely no possibility of expanding into the world market. This is because far from being competitive, it lacks basic compatibility and amplifies only user inconvenience in the mobile Internet era. This is a problem that results as the government, failing to understand the nature of the dynamic global technology market that is quickly transforming and creating new standards, designates a particular method as “the best technology” and forces it on everyone.

Fortunately, in some government circles as of late, there are some noteworthy moves to change South Korea’s reality, which is far removed from the post-iPhone world. At the Mobile World Congress in Barcelona, Spain on Feb. 16 (local time), Korea Communications Commission (KCC) Chairman Choi See-joong drew attention by saying that if South Korea’s domestic IT industry fails to respond well to the mobile revolution, it could fall behind in the world market. Chairman Choi also said that the country would soon orient itself towards global standards to attack the world market and strengthen national competitiveness. The Presidential Council for Future and Vision also sent delegates from the Financial Supervisory Service, Korea Financial Telecommunications and Clearings Institute, Korea Communications Commission and Korea Internet & Security Agency together Friday to discuss solutions to resolve the current reality of the smartphone environment, that in South Korea mobile payments are not yet.

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