Kakao Pay Securities Lowers Deposit Usage Fees... "5% Subscription Attraction Is Just for Show"

[Asia Economy Reporter Lee Seon-ae] Kakao Pay Securities is lowering the yield on account balances, known as the 'deposit utilization fee.' Since Kakao Pay Securities had been paying higher deposit utilization fees than other securities firms to attract new customers, the decision to reduce the fee seems to have been met with some dissatisfaction among customers. Ultimately, there are criticisms that the interest rates touted at the launch of the securities business were merely for show.

According to Kakao Pay Securities on the 23rd, the company will reduce the deposit utilization fee for comprehensive accounts, mini safes, and bucket lists from the current 0.6% to 0.3%, effective December 19. There is no detailed explanation for the reason behind the reduction. Kakao Pay Securities is expected to be at the center of controversy for being stingy, given that its deposit utilization fee was higher than other securities firms at the time of new account openings, making it popular among the MZ generation (Millennials + Generation Z).

One individual investor raised their voice, saying, "I moved my account here because Kakao Pay Securities offered slightly higher rates than others, but this stingy decision is disappointing." They added, "Compared to when the securities business started, the rates have been steadily decreasing."

Kakao Pay Securities initially promoted a high annual interest rate of 5% specifically on the 'deposit utilization fee' as its first move into the securities business. In February last year, to commemorate the launch of the securities firm, they accepted pre-registrations for securities account openings from Kakao Pay users and ran a promotion offering a 5% (pre-tax) annual interest rate on deposit utilization fees when Kakao Pay Money, Kakao Pay's prepaid payment method, was deposited into the securities account. However, the 5% rate was limited by a deadline of May 31 and a maximum amount of 1 million KRW. Amounts exceeding 1 million KRW were subject to a 1.10% annual rate. Subsequently, the deposit utilization fee was lowered to around 0.5% to 0.6%.

Meanwhile, deposit utilization fees at domestic securities firms have continuously been a subject of controversy. The deposit utilization fee is the fee paid by securities firms for using funds deposited by customers. The fee rate can be set autonomously by the securities firms, and as free stock trading commissions became widespread to attract customers, securities firms adopted a strategy of raising deposit utilization fees.

However, the atmosphere changed after March last year. When the Bank of Korea lowered the base interest rate from 1.25% to 0.75% due to the economic slowdown caused by COVID-19, securities firms also began to reduce deposit utilization fees. KB Securities, Mirae Asset Daewoo, and Samsung Securities lowered their fees immediately after the rate cut, and by May of the same year, Kiwoom Securities, Korea Investment & Securities, and NH Investment & Securities also reduced theirs to around 0.1%. Mirae Asset Daewoo lowered the fee rate applied to foreign currency deposits from 0.35% to 0.1%.

An industry insider in financial investment said, "When the base interest rate was raised, there were almost no increases in deposit utilization fees, and only a few securities firms adjusted their rates according to the rate hike. However, when the base rate was lowered, most securities firms reduced their deposit utilization fees," adding, "They are very stingy in the fees paid to investors."

According to the Korea Financial Investment Association, as of the second quarter of this year, the deposit utilization fees paid to investors by 44 domestic securities firms totaled 56.56542 billion KRW, a 39.9% (37.64038 billion KRW) decrease compared to 94.258 billion KRW in the same period last year. The average deposit utilization fee rate among domestic securities firms was 0.17%. Seventeen securities firms, including DB Financial Investment, KB Securities, NH Investment & Securities, SK Securities, Kyobo Securities, and Daishin Securities, pay customers a deposit utilization fee rate of 0.10%. Samsung, Meritz, Shin Young Securities, and Shinhan Financial Investment recorded slightly higher deposit utilization fee rates of 0.20%. Others such as Yuanta Securities (0.23%), Eugene Investment & Securities (0.25%), and Cape Investment & Securities (0.40%) have relatively higher rates.

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