Mobile Phone PG Companies Also Untact Beneficiaries... "Sales Expected to Rise if Limit is Increased"

Kyobo Securities, KG Mobilians, Danal, and Galaxia Comms Expected to Benefit

[Asia Economy Reporter Minji Lee] Amid expectations of high growth for e-commerce companies due to the impact of the novel coronavirus infection (COVID-19), opinions have emerged that mobile phone PG companies providing online micro-payment methods will benefit.

According to Kyobo Securities on the 30th, KG Mobilians, Danal, and Galaxia Comms, which occupy nearly 93% of the mobile payment market share, are expected to see their sales increase by 15-20% in the first quarter compared to the same period last year. However, it is judged that there will be differences in the growth rates of e-commerce transaction amounts by company in February.

Ji-won Park, a researcher at Kyobo Securities, said, “The transaction amounts of major e-commerce companies have been steadily increasing until March this year,” and “The e-commerce market is expected to achieve high growth of 25-35% compared to the same period last year by March.”

When a mobile phone payment occurs, merchants receive settlements after deducting PG fees (including mobile carrier fees). Since consumers pay their communication bills and the carriers settle the micro-payment amounts to the PG companies one month later, an advance settlement structure has developed for the convenience of merchants. Although initial cash outflow occurs during advance settlement, it allows for higher PG fee receipts compared to post-settlement.

The possibility of an increase in the mobile micro-payment limit is also positive for PG companies. When the mobile payment limit was raised by 66.7% from 300,000 KRW to 500,000 KRW in June 2015, the mobile micro-payment market growth rate increased by about 15-17.8% compared to the same period the previous year. At that time, the performance of mobile payment companies recorded annual sales growth of up to 30% from the third quarter of 2015 onward.

If the micro-payment limit increases, it is expected that high-priced product categories such as travel and home appliances will be included within the scope of mobile payments. Researcher Minha Park said, “If the limit is raised, market growth will continue until next year,” and “Travel and transportation services, as well as home appliances, electronics, and telecommunications products, are the first and second largest product categories in the online shopping market, so mobile payment companies are expected to benefit in these sectors.”

This content was produced with the assistance of AI translation services.