[Opinion] Expansion of Account-Based Payment Services and Business Diversification of Card Companies

Seo Ji-yong, Professor, Department of Business Administration, Sangmyung University

Recently, the landscape of the domestic payment market is rapidly shifting from card-based to account-based systems. Until now, the domestic payment market showed an increasing trend in card-based simple payments, aligned with consumers' preference for cards. Card-based simple payments involve storing card information on mobile devices in advance and making payments by entering a password or tapping the device at the time of the transaction.

Big tech companies leading the simple payment ecosystem are actively providing incentives such as points for payment methods that charge money to accounts rather than cards. This is because the account-charging payment method is considered effective in binding financial consumers to the platform. With the amendment of the Electronic Financial Transactions Act and the implementation of small-amount deferred payments, the shift to account-based payment methods is expected to accelerate further.

Moreover, the recently expanding open banking service is also expected to accelerate the transition to the account-based payment market. Open banking is a service that allows financial consumers to check and transfer all account statuses through a single app without the need to install multiple applications, and it was fully implemented at the end of 2019. Since the end of last year, the scope has been expanded to allow information providers to participate in open banking, enabling card companies and savings banks to join the open banking service. Card companies, which do not have their own accounts, are expected to accelerate new business expansion through entry into comprehensive payment services starting with open banking. The open banking service allows customers to view financial information such as card information and usage history at once, serving as a foundation for card companies to expand into comprehensive asset management services.

In particular, when card companies obtain licenses for comprehensive payment services, they will be able to issue their own payment accounts, enabling them to provide various financial services such as account-based payments without partnering with banks or other financial institutions. Ultimately, card companies can move toward business diversification by linking open banking services, MyData, and comprehensive payment services to offer a variety of financial services.

With the advent of the account-based payment service era, card companies' efforts to develop new products are also expected to accelerate. Global financial companies are already rapidly launching new concepts of account-based financial services. Sub-account services have a bright outlook in terms of curbing overspending and encouraging savings among financial consumers in a low-interest-rate era. Consumer spending is made through payment accounts, and sub-accounts serve as savings accounts for achieving financial goals, allowing joint participation in savings with friends and family. Additionally, spare change transfer investment services are emerging as representative account-based services. In the U.S., Acorns, and in the U.K., Monzo, deposit leftover change after payments into accounts and invest small amounts in high-yield financial products such as funds.

In conclusion, as customer touchpoints converge on platforms, advanced platform commerce is activated, and open services expand, the speed of transition from card-based to account-based payment methods in the domestic payment market will proceed rapidly. Furthermore, card companies that have obtained MyData licenses, which serve as the foundation for developing customer-tailored products, are expected to focus more on developing new concept account-based services on the premise of entering comprehensive payment services.

Seo Ji-yong, Professor, Department of Business Administration, Sangmyung University

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