Kakao, the provider of KakaoTalk, a mobile messaging application and global mobile social platform, in partnership with global IT service provider LG CNS, has announced the launch of KakaoPay, a new mobile payment option for KakaoTalk users in South Korea. With over 93 percent of smartphone users in Korea currently using KakaoTalk, the new service is expected to provide a significant boost to Korea’s growing e-commerce industry.
Kakao’s latest venture into the e-commerce/mobile payment space underscores the company’s commitment to strategically expand its mobile social platform in effort to provide users with added value through increased connectivity. Kakao has already experienced breakout success in gaming, music, and beyond.
LG CNS’s MPay module will serve as the back-end payment gateway to KakaoPay, which eliminates much of the inconveniences found on conventional mobile payment systems available in Korea. This includes the need for SMS authorization, multi-step verification process and public key certificates. Public key certificates are Korea-specific web certificates currently required for online activities ranging from banking and commerce to even public services that require user identification. Following a scheduled update, KakaoPay is expected to be completely free of public key certificates.
KakaoPay is expected to support cards from most major Korean financial institutes, and users with cards from multiple companies will be able to manage them all through KakaoPay. Users can register up to 20 non-corporate credit and debit cards to their accounts via the KakaoPay menu found within the Settings of their KakaoTalk app. Subsequent transactions require only a user-set password, instead of multiple verifications via SMS or authentication certificates.
KakaoPay boasts the highest level of security among mobile payment services. It employs LG CNS’s MPay module, which was given a ‘Gagun’ (A) rating by Korea’s Financial Security Service (FSS) on July 2014, as the first payment system with security levels comparable to public key certificates. As such, KakaoPay users will be able to make online purchases exceeding the previous KRW 300,000 (approx. USD 291) limit without such certificates by the end of 2014.
A KakaoPay account can only be linked to a single smartphone and all cards must be under the same name as the device’s registered user. KakaoPay does not require a separate download, and will appear automatically within the user’s KakaoTalk Settings menu for Android users on version 4.6.5 or higher.
KakaoPay’s user data is protected through an advanced encryption method which combines the user’s card and transaction information then stores segments of the encrypted data in separate locations, a security procedure considerably more sophisticated than those currently employed by major global payment services.
Following the initial launch, Android users in Korea can find KakaoPay as one of the payment options in KakaoTalk’s in-app Gift Shop, a mobile marketplace where vouchers for physical goods can be bought and sent as gifts. Kakao is in the process of extending the service to a number of home shopping channels, e-commerce sites as well as offline channels. An iOS version is expected to launch after October.
“Being an operator of a commerce platform, Kakao recognized the need for additional user payment options that offered greater security and convenience. It made sense to partner with LG CNS, whose MPay system is one of the most competitive in the world, and was certified by Korea’s Financial Security Service for its outstanding security,” said a spokesperson for Kakao.
LG CNS’s representative said, “LG CNS’s MPay module’s security and convenience are up to par with the highest global standards. Through our partnership with Kakao, we think we can really energize the mobile payment industry.”