South Korea may be a technology powerhouse, but where online payments are concerned, it has lagged behind due to draconian authentication methods. All that is about to change.
LG CNS, a subsidiary of LG, the country’s leading electronics company, has embarked on a new project that will see it completely redesign Korea’s internet and smartphone-based payments system.
In partnership with the popular chat app Kakao Talk, the team has spent two years developing the technology, which LG CNS says is more secure than Alipay or Paypal – a key consideration in a country where major data breaches have incurred public wrath. This enhanced security is down to the way that encrypted card and personal data is split between the LG CNS server and the user device, so that even if a hacker were to breach one side, the information obtained would be incomplete.
Called MPay, the system “received certification for highest security clearance from the financial regulator, meaning it can be used for transactions without limitations, which is a first in the country,” CEO Kim Dae-hoon told the Wall Street Journal. This makes MPay “the only online payment software in South Korea that has gotten this approval.”
According to Kim, major card providers such as Samsung, KB and Hyundai have already agreed to partner with MPay, as have the malls run by GS, CJ, Hyundai and Lotte. Kim believes that the next five years will spell the end of multilayer payment practices such as the archaic ActiveX, a 1990s Microsoft product that internet shoppers must often download to proceed, simplifying and increasing the popularity of online purchases in South Korea.
By partnering with Kakao, Kim says that the project has been given a huge head start. “We’ve, of course, tried selling the service on our own. But it didn’t work,” he said. “People aren’t used to having to download a separate app to use as their mobile payment tool. We needed a big user base to start with, which Kakao Talk had. And now, anyone on the Kakao app will have easy access to our mobile payment service.”