The simple payment system is growing, centered on Generation Z. / Photo by Hyundo Song, Asia Economy intern reporter
[Asia Economy Reporter Lim Juhyung, Intern Reporter Song Hyundo] 'Smart Pay,' a payment method through smartphone applications (apps), is replacing cash among Generation Z (those born in the 1990s to 2010s). Digital technology is more familiar to the younger generation accustomed to IT devices than physical payment methods like cash. Various benefits provided by fintech platforms are also one of the reasons leading Generation Z to use pay services.
Smart Pay refers to a simple payment system that allows transactions both online and offline through apps. Online, it offers services such as remittance and payment via apps, while offline, payments are made by displaying a QR code on the smartphone screen to scan like a barcode or by using the smartphone's NFC (Near Field Communication) technology. 'PayPal,' created in 1999 by Elon Musk, CEO of Tesla, was the pioneer of simple payment services, and in Korea, there are services like 'KakaoPay' and 'Naver Pay.'
Offline, payments can be made by displaying a QR code on the smartphone screen and scanning it like a barcode, or through the smartphone's NFC function. / Photo by Yonhap News
Although pay services have existed in the past, they have emerged as the primary payment method surpassing cash for Generation Z. According to a survey conducted this year by Woori Financial Research Institute targeting people in their 20s, 86.9% responded that they make payments through fintech financial services.
The reason is convenience. According to the 'Payment Means and Mobile Financial Service Usage Behavior Survey Results' published by the Bank of Korea in May, respondents in their 20s who said they use simple payment services cited "not having to carry physical payment means" as an advantage. The pay system, which digitizes all physical payment methods such as bills and check cards, appeals to Generation Z.
Various benefits provided by fintech platforms also drive Generation Z to use simple payments. Due to the deep involvement of IT technology in pay services, fintech companies mainly enter this market, conducting various point and coupon distribution events to attract new customers. Moreover, they easily form partnerships with e-commerce platforms familiar to the younger generation to hold special discount events or introduce new fintech services such as BNPL (Buy Now Pay Later).
Experts predict that while the younger generation familiar with IT devices adopted simple payments faster, older generations will also start using them next. Professor Eunhee Lee of Inha University’s Department of Consumer Studies said, "Pay services will become more widespread, centered on the mobile-savvy MZ generation. Once secure systems such as safety and security are established, these services are likely to spread to older users as well. As the usage rate of such simple payment systems increases, they will blend into our lives similarly to kiosks."
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