Korea To Boost Near Field Communication and Pay-by-phone services

Last week, as reported by Reuters and other media, the Korea Communications Commission announced it would require mobile phone vendors to equip all smartphones with near field communication (NFC) technology, which allows wireless data exchanges at short range, letting people pay for goods, store electronic tickets, collect coupons by swiping a cell phone at a checkout or scanning tags on movie posters.

So far, only two NFC-enabled handsets have been offered in South Korea -- Samsung's Galaxy S II and Pantech's Vega Racer -- and a lack of standardised settlement checkouts at retailers, and disagreements over fee-sharing structure and controlling customer information have prevented the industry from taking off.

The commission said mobile operators and credit card firms had agreed to install or upgrade checkouts with NFC processing technology in retailers, fast food outlets, coffee chains and petrol stations, while card companies were offering discounts to customers using mobile payment services to promote the industry.

"Mobile payment technology has been available since early 2000 but it failed to take off for various reasons ... but today's agreement is a small step toward mutual growth going forward," the head of the Korea Communications Commission said in a statement.

Smartphones Boost Mobile Commerce

As reported in The Korea Times, the rapid diffusion of smartphones in the South Korean market is giving a measurable boost to mobile commerce. 11st, an online market operated by SK Telecom, announced that it recorded 1.85 billion won in monthly sales through mobile shopping last month, the most since it started the service. Its mobile shopping application had 625,000 downloads, and Auction and G-market have also launched similar applications. Mobile commerce currently marks 4 billion won in monthly sales, and is expected to grow to 50 billion won this year. This is still a small part of the online shopping industry, but the growth is remarkable. According to the Korea Online Shopping Association, the market is set to double, exceeding 120 billion won next year. Not only open markets but also TV home shopping channels are stretching to the mobile sector. CJ O Shopping, Hyundai Home Shopping, GS Home Shopping, and Lotte Home Shopping have launched applications to attract smartphone users. They find it appealing as they can reach out to customers regardless of time or place. On top of showing the shopping programs in real-time, the home shopping channels are linking the mobile service with their other online and offline shops.

Korea's e-business Mired in the Past?

An editorial in the English edition of the Chosun Ilbo today declared that "Korea's E-Business is Mired in the Past."  It pointed out that people in Korea cannot shop online, do internet banking, or access government or tax office sites using their smartphones.  The editorial notes that this is unheard of in the 80 other countries that introduced smartphones (read Apple iPhone and Android phones) before Korea.

The reason for this situation is the officially certified electronic payment standard used in Korea, which was introduced in 2000.  To meet that standard, local companies developed solutions that were only compatible with  Microsoft's Internet Explorer browser and required use of ActiveX controls.  According to the Chosun Ilbo, Korea is the only country in the world to use a certification program using only ActiveX functions. Furthermore, it notes that other countries have chosen standard web technologies that can be used on both personal computers and smartphones and do not require users to download one ActiveX security program after another to make a single electronic payment.

Brookings Institution Report Ranks Korea's e-Government Number One

Another in a series of reports on e-government by the Brookings Institution has ranked South Korea number one.  The report notes that "unlike traditional bricks and mortar agencies, digital delivery systems are non-hierarchical, non-linear, interactive and available 24 hours a day, seven days a week. The non-hierarchical character of Internet delivery permits people to look for information at their own convenience. The interactive aspects of e-government allow both citizens and bureaucrats to send as well as receive information."  To evaluate the state of digital government, the study examined 18 different features. Four
points were awarded to each website for the presence of the following features: publications, databases, audio clips, video clips, foreign language access, not having ads, not having premium fees, not having user fees, disability access, having privacy policies, security policies, allowing digital signatures on transactions, an option to pay via credit cards, email contact information, areas to post comments, option for email updates, option for website personalization and PDA accessibility. These features provide a maximum of 72 points for particular websites. Each site then qualifies for up to 28 points based on the number of online services executable on that site (one point for one service, two points for two services, three points for three services and on up to 28 points for 28 or more services). The overall e-government index runs along a scale from zero (having none of these features and no online services) to 100 (having all features plus at least 28 online services). Totals for each website within a country were averaged across all of that nation's websites to produce a zero to 100 overall rating for that nation.

Korea a World Leader in Credit Cards, ATMs Per Capita

The use of a bank card, credit card or debit card to conduct transactions at an ATM is a very common experience for anyone living in Korea these days.  Koreans have more credit and debit cards per person than any country in the world, with the exception of the United States, according to Bank of Korea data yesterday.  And, as shown in the accompanying graphic from an article in the Joongang Ilbo, it has more Automatic Teller Machines (ATMs) per capita than any other nation in the world.  Among 14 countries surveyed, Korea ranked second lowest in terms of the portion of an individual's assets held in either cash reserves or demand deposits. (click on the accompanying graphic to see a full size version)