SEOUL, KOREA - Payment gate stocks that have led the KOSDAQ market are showing weakness of late. According to the Korea Exchange on May 25, the share price of KG Inicis, the No. 1 company in the payment gate market with a market share of 32 percent, has slid precipitously since March this year. From the peak on March 6 to May 23, KG Inicis saw its price drop 30.76 percent.

Korea Cyber Payment Inc., the second largest payment gate service provider with 16 percent of the market share, has also seen its price fall 13.50 percent from early April. The price of Danal, a third-party small payment service operator that dominates the market with Mobilians, has declined 16.58 percent since early April.

 

This is largely because of the worries over PayPal and 1-Click that are expected to enter the Korean market any time soon. Currently PayPal is used by eBay as the preferred payment system while 1-Click by Amazon. Once these services establish electronic payment systems, there would be no room left for the home-grown payment gate service providers.

 

Oh Dong-hwan, analyst with Samsung Economic Research Institute, said, "Domestic payment service companies could comfortably grow their business thanks to the explosive growth of the e-commerce market. But their oligopolistic hold over the market will easily collapse if foreign giants come in to the domestic market and take away their business."