A new smartphone-based payment service, aimed at relieving small business owners of the burden of settlement costs, was launched on a trial basis in Seoul on Thursday.
The Seoul Metropolitan Government said it began the trial service of the "Zero Pay" service ahead of its formal launching after March next year.
Zero Pay is a mobile direct transaction system in which money is transferred from a consumer account to a merchant account when the consumer scans the merchant's QR code with a smartphone using the existing apps of commercial banks or online payment platforms, such as Naver Pay and Payco. Twenty commercial banks, including all major lenders, will take part in the Zero Pay service, with 11 of them joining the test service.
Participating vendors with less than 800 million won ($710,000) in annual sales are exempt from the transaction fee, while those with annual sales in excess of the amount will be subject to commission rates of 0.3 to 0.5 percent. Compared with the credit card settlement system, the rate of Zero Pay transaction fees is up to 1.4 percentage points lower.
Seoul officials said 26 franchise companies, including Paris Baguette, Paris Croissant, bhc, Lotteria, Angel-in-us and Krispy Kreme Doughnuts, and over 85 percent of the vendors in the Gangnam Terminal Underground Shopping Center and the Yeongdeungpo Station Underground Shopping Center participated in the trial service.
"Seoul has about 660,000 small businesses, or a ratio of eight in 10. More than 90 percent of 533,000 business members of credit card companies are small entities with annual sales of less than 800 million won. This means nearly all small businesses in Seoul will be able to benefit from the Zero Pay service," said a municipal official.
There will also be benefits for consumers, as an income deduction rate of 40 percent will be applied to their Zero Pay-based purchases.
Sejong Center for the Performing Arts, Seoul Plaza Ice Skating Rink and other public facilities in the capital will offer 10 to 30 percent discounts to Zero Pay users.
Following the formal launching of Zero Pay in Seoul next year, the government plans to gradually expand the service to other parts of the country.
The Seoul government will recruit convenience stores and other franchise companies to join the Zero Pay service, officials said.
It will also push to introduce the near field communication, or NFC, payment method for the service, allowing consumers to complete transactions just by waving their smartphones over NFC terminals. (Yonhap)