Kakao Pay is a payment system that originated from a mobile messenger app Kakao Talk. Currently, Kakao Pay is in pursuit of the expansion of its functions. This innovation is implemented in order to improve the efficiency and performance of the payment system. Also, it is modelled after a set of innovations that are already put into practice in another payment system WeChat Pay that is based in China. The purpose of this paper is to present a SWOT analysis of the innovation under discussion and the aspects that the implementation of this plan must take into account.
Strengths
Strong positions in the Korean market
Kakao Pay is very strongly represented in the Korean market. Namely, it has over 10 million subscribers using its simple payment approach (“Business commerce,” 2013). Many different franchises and chains support this payment system and rely on their services. Over 1500 franchise stores use Kakao Pay in Korea (“Business commerce,” 2013).
The provision of high-level security of payments and transactions
Kakao Pay is favored by many users due to its safety in terms of operations security. As a result, its users are likely to embrace the expansion of functions that are planned.
Simplicity
Kakao Pay is valued due to its ease of use and simplicity. This payment system positions itself as a flexible solution for situations where clients seek convenience and speed. The addition of new functions that are currently used by WeChat Pay will improve this quality.
The plan is evidence-based
The addition of new functions to the services offered by Kakao Pay is based on the experience and innovations that are already provided by WeChat Pay. Practically, the new functions will match those offered by WeChat Pay. The strength is that these functions and their effectiveness and popularity have been tested on the Chinese market where they turned out rather successful. This way, Kakao Pay is making an investment into a practice whose effectiveness was proved in practice.
Weaknesses
Kakao Pay operates in Korea solely which means that its base of users is limited in many ways
Kakao Pay has seen rapid growth by attracting 10 million users within the first year and a half of being active (Iglauer, 2016). However, it is possible that the system may not see the same rate of growth since its target audience is represented by Korean users only.
Technological challenges and issues
QR code payment option is one of the most significant and desired functions that are planned as a part of Kakao Pay’s expansion. However, the weakness is that the generation of receipts for QR payment operations is currently problematic and will take a long time to complete (“Kakao Pay Institutes QR code payment system,” 2017). QR code payment is a very convenient and loved feature in WeChat Pay as it allows the users to snap pictures of QR codes on products and goods for an automatic payment transaction. The challenges facing this function are significant slowdown for the entire enterprise.
Opportunities
The expansion of the current base of users
The new functions are anticipated to attract many new customers to Kakao Pay. At present, Kakao Talk has over 48 million users in South Korea which represent the vast majority of its population (Jourdan, 2017). Potentially, all of them could embrace Kakao Pay as well which would lead to the massive growth of the payment system.
Technologic advancements valued by individual users and businesses
As one of the most expected additions, QR code payment is going to be convenient for both individual users and businesses that support Kakao Pay. To be more precise, due to the introduction of this system, many franchise shops and restaurants could replace their cash registers with QR codes (Kakao Pay Institutes QR code payment system,” 2017). This would simplify the exchange and move retail and business in the country to a brand new level.
Threats
The poor performance of the technology
One of the most significant threats to the innovation in question is the improper functioning of the system which will expose transactions to confusion and security breaches
Increased competition from existing rivals
Kakao Pay has to compete with very powerful rivals in the Korean market one of whom is Google Pay. The improved performance of such rivals while its innovation is waiting for release or facing challenges may cause the system to lose some of its users.
The entry of new competitors
Though unlikely, entry of new competitors is a threat of a medium level in the Korean market of online payment systems. Potentially, there is a risk that a new and strong competitor will enter the market with a set of new and improved options and start taking away from the existing base of users of Kakao Pay. The growth and development of mobile banking and online in-app payments can lead to increased diversification and fragmentation of the Korean market. This is especially the case knowing how many high-performing mobile payment systems there are in Asia that operate internationally and can potentially enter South Korea.
References
Business commerce. (2013). Web.
Iglauer, P. (2016). Kakao Pay tops 10 million users in South Korea. Web.
Jourdan, A. (2017). Alibaba payment affiliate Ant to invest $200m in Korea’s Kakao Pay. Web.
Kakao Pay Institutes QR code payment system. (2017). Web.