SettleBank, Online Payment Boom... Strong Performance Growth 'Hoho'

[Asia Economy Reporter Yoo Hyun-seok] SettleBank is breaking its record-high performance every year due to the growth of the online payment market. Along with the growth of its existing simple cash payment service, it is expanding its business areas to include point payments and mobile phone payments, and is expected to record strong performance in the second half of this year as well.

SettleBank is a fintech (finance + technology) company specializing in electronic financial payment services, established in 2000. Its main businesses include simple cash payments, virtual accounts, firm banking, and payment gateway (PG) services. It currently operates the government-led simple cash payment service ‘ZeroPay’.

Its performance has shown an improving trend every year. On a consolidated basis, sales and operating profit were KRW 57.2 billion and KRW 13.2 billion in 2018, and recorded KRW 65.6 billion and KRW 13.4 billion in 2019. Last year, it recorded KRW 78.1 billion and KRW 10.7 billion.

By business division, the growth of simple cash payments stands out. The core simple cash payment business is a service where, after registering the user’s bank account information once on the payment platform, simple identity verification such as password or biometric authentication is performed at the time of payment, and real-time withdrawal transfer is made. Currently, major e-commerce platforms such as Gmarket and 11st, as well as most simple payment companies like KakaoPay and NaverPay, are key customers. This service was launched in 2015 and recorded a monthly transaction amount of KRW 12.5 billion within one year. Notably, the transaction amount in the first quarter reached KRW 2.3 trillion. It also holds the number one domestic market share at 97%.

The simple cash payment division’s sales increased from KRW 29.2 billion in 2019 to KRW 36.7 billion last year, and achieved KRW 10.1 billion in the first quarter, a 36.86% increase compared to the same period last year. Along with this, the PG business is also growing, increasing from KRW 10.5 billion in 2019 to KRW 14.7 billion last year. The first quarter of this year also achieved KRW 5.2 billion, a 59.77% increase year-on-year. Other businesses such as virtual accounts and firm banking showed steady growth, though at a lower rate compared to others. Virtual accounts increased slightly from KRW 5.3 billion in the first quarter last year to KRW 5.7 billion this year, and firm banking rose from KRW 580 million to KRW 630 million during the same period.

This year, both sales and operating profit recorded high growth. On the 5th, through a public disclosure, it announced that the provisional sales for the second quarter were KRW 26.1 billion, a 36.4% increase compared to the same period last year. Operating profit for the same period was KRW 4.5 billion, a 96.0% increase. Sales and operating profit for the first half were KRW 49.4 billion and KRW 8.0 billion, respectively, up 37.6% and 82.0% year-on-year.

The second quarter performance improved across all business divisions. Sales of the simple cash payment and PG divisions recorded KRW 10.6 billion and KRW 6.7 billion, respectively, showing growth compared to the previous quarter. Diversification of payment methods has borne fruit. In July, SettleBank signed contracts with the three major telecom companies and acquired the mobile phone payment business rights. In addition, the local currency business linked with ZeroPay, which has been ongoing since last year, is continuously expanding.

A SettleBank official said, "We believe that the diversification of payment methods, which we have focused on, is bearing fruit," adding, "The performance reflects not only the solid growth of the core simple cash payment business but also explosive external growth in newly entered fields such as the PG business and local currency business, which we have concentrated on since last year."

The outlook for the second half is also bright. On the 6th, Eugene Investment & Securities forecast in a company analysis report that SettleBank’s sales and operating profit for this year will reach KRW 103.4 billion and KRW 18.0 billion, respectively, expected to increase by 32.4% and 68.9% compared to the previous year. Also, in June, Shinhan Financial Investment predicted sales and operating profit of KRW 100.0 billion and KRW 16.3 billion, respectively, expected to increase by 29.6% and 36.4% year-on-year.

Researcher Park Jong-seon of Eugene Investment & Securities analyzed, "The expected consolidated sales and operating profit for the third quarter are KRW 26.5 billion and KRW 4.7 billion, respectively, up 31.5% and 43.4% year-on-year, and are expected to set a quarterly record high sales," adding, "Sales from existing simple cash payment services, virtual account services, and PG services are expected to maintain stable double-digit growth, and the performance of the consolidated subsidiary Hecto is also expected to be reflected."

SettleBank plans to strengthen its overseas and B2C (business-to-consumer) business in the second half. It is currently discussing collaboration with global companies such as WeChat Pay. A SettleBank official emphasized, "In addition to the simple cash payment sector, we are expanding our business territory and diversifying payment methods into various fields such as virtual accounts, firm banking, PG, ZeroPay, point payments, and mobile phone payments," adding, "In July, we plan to continue an aggressive business expansion policy in the B2C sector, including launching the ‘010PAY Check Card’ based on the simple payment platform ‘010PAY’ application service in cooperation with Woori Card."