The Korea Financial Settlement Service will begin building a "hub system" to connect mobile-based small payment services across various Asian countries. This will replace the infrastructure of global brands like Visa that had to be used to provide services such as overseas QR payments, allowing domestic financial institutions and fintechs to reduce expenses and service costs.
Park Jong-seok, head of the Financial Settlement Service, met with reporters in Milan, Italy, on the 7th (local time) and noted that domestic financial institutions and fintechs are pushing to establish a hub system that can connect with small payment services in various Asian countries.
According to the Financial Settlement Service, recent trends in the global payment market show that direct consolidation between representative payment systems and mobile payments are becoming more prevalent.
The Financial Settlement Service, which operates the domestic small payment system, plans to support mobile-based small payment services such as overseas QR payments and cardless Automated Teller Machines (ATMs) through the hub system.
Overseas QR payments refer to the method of scanning QR codes placed at overseas merchants using a mobile app for payment. It supports both outbound payments by domestic customers and inbound payments by overseas customers.
Cardless ATMs are services that allow users to withdraw local currency from overseas ATMs using a mobile app without a plastic card. This addresses the issue that overseas QR payments are not possible at merchants that only accept cash.
The Financial Settlement Service has set a first-phase goal of implementing overseas QR payment services in Indonesia by the end of the year. After that, it plans to expand connections focusing on active exchange countries in Asia, such as Vietnam, in collaboration with member countries of the Asia-Pacific Payments Network (APN).
The Asia-Pacific Payments Network (APN) is a consortium of payment organizations from 12 countries, including Malaysia, Singapore, Thailand, Indonesia, the Philippines, Vietnam, South Korea, China, Japan, Myanmar, Sri Lanka, and Nepal.
Park noted, "Through the hub system infrastructure, we plan to support financial institutions and fintechs to provide services at lower expenses," and added, "We hope to contribute to enabling financial institutions to offer competitive services, and by opening the hub system infrastructure to any business with the appropriate license, we expect to lower the entry barriers for cross-border payment services."
It is estimated that domestic financial institutions and fintechs will benefit from reducing the fees (around 1% of the transaction amount) that occur when using the infrastructure of international brands like Visa and Mastercard to provide overseas payment and cash withdrawal services.
In addition, the Financial Settlement Service is preparing a "TrustOne Service" that can authenticate the use of financial services centered around mobile devices, such as smartphones, by linking physical credit and debit cards to mobile devices. This service is expected to safely protect customers' financial assets from electronic financial fraud and hacker attacks.
Park stated, "The TrustOne Service automatically authenticates when a physical credit or debit card with an embedded IC chip is tapped against the user's smartphone," and added, "I believe this can significantly resolve the financial security issues of mobile-centered payment systems without a one-time password."