Fintech leader highlights digital wallet expansion and cost-saving potential amid regulatory caution
Travel cards that eliminate the need for currency exchange have now become an essential item for overseas travel. Financial institutions offering travel cards range widely, from commercial banks to card companies. However, the first company to introduce the concept of foreign currency prepaid recharge cards in South Korea is the fintech firm ‘Travel Wallet’.
Despite numerous latecomers, Travel Wallet’s market share has not declined. As of the first half of this year, the number of cards issued has surpassed 8 million, and the cumulative transaction amount reached 6 trillion Korean won. Last month, the company was selected as a pre-unicorn enterprise. However, Kim Hyungwoo, CEO of Travel Wallet, explained, “Foreign currency payments are the number one contributor to Travel Wallet’s current success, but three years ago, the company began searching for new growth areas.”
The three core businesses Travel Wallet is now focusing on are B2B (business-to-business) transactions, overseas expansion, and stablecoin. These involve selling payment data accumulated by Travel Wallet as a payment company to other payment firms, expanding the Travel Wallet business globally, and pioneering the stablecoin payment market.
In particular, Kim argued that the era of stablecoin payments worldwide is near and that South Korea must establish regulations and infrastructure more swiftly. He noted that South Korea tends to have strict regulations on new technologies and worries about potential problems, but technological progress can only be achieved through trial and error. The following is a Q&A with Kim, conducted at Travel Wallet’s headquarters in Gangnam-gu, Seoul, on the 28th of last month.
— Despite the travel card market becoming a red ocean, Travel Wallet still maintains a strong user base. What are Travel Wallet’s unique strengths?
“We heavily rely on network effects. In addition to currency exchange and payments, a popular feature is peer-to-peer foreign currency transfers. This function allows travelers to settle remaining group funds in local currency on the spot, encouraging non-users to join.
Another service driving new users is ‘N-split payment’, which enables real-time payment splitting via individual cards at the moment of purchase, unlike traditional Dutch pay methods where users request settlements after payment. Additionally, the travel community service within our app differentiates us from typical travel card providers.”
— Recently, Travel Wallet has been preparing to leap forward as a digital wallet rather than focusing solely on travel cards.
“A digital wallet is a digital purse that allows payments in various currencies and virtual assets without relying on traditional bank accounts. Compared to opening a new bank account, digital wallets have simpler sign-up processes and lower psychological barriers for users.
While blockchain technology underpins digital wallets, users don’t need to understand it — only the convenience and cost-effectiveness matter. We anticipate that everyone will eventually use digital wallets instead of bank accounts for transfers and payments. If the concept of a digital wallet seems unfamiliar, think of Alipay in China.”
— Why are you so confident about digital wallets and stablecoins despite skepticism?
“Cost is the key. Domestic bank transfers are free, but interbank or international transfers incur fees. However, stablecoins enable real-time, low- or no-cost transfers.
Over 1 billion people in China use Alipay. Alibaba, originally an e-commerce platform, rapidly expanded Alipay because it offered real-time, low-cost payments.”
— Do retail stores have reasons to adopt digital wallet payments?
“Actually, the benefits are even greater. Digital wallet payments will spread further in overseas markets. For example, when a Japanese tourist makes a card payment in South Korea, both the payer and merchant are charged approximately 3.5% in fees. While South Korea’s card fees are low, international payment fees abroad are exorbitant. Stablecoin payments could save both parties 3.5% each. In the payment industry, a profit margin above 3% is enough to drive adoption.
Domestically, merchants also benefit. Large merchants pay around 2% in card fees, while small businesses pay 0.8-1%. Though 1% may seem minor, small retailers often have profit margins under 10%. If a retailer with a 7-8% profit margin pays 1-2% in card fees, that’s 20-30% of their profits. Making this free would significantly boost their earnings — no retailer would refuse a digital wallet.”
— Are there security concerns?
“Have you heard of hacking incidents involving KakaoPay or Naver Pay? Banks experience accidents annually due to outdated on-premise systems, which are structurally vulnerable and costly to upgrade.
However, modern payment systems use cloud technology. Developers continuously evolve cloud solutions and address their shortcomings. Thus, they are arguably safer.”
— Financial authorities and the Bank of Korea advocate cautious approaches to digital assets and payments.
“Resistance to new technologies is natural, and trial and error are inevitable. However, rejecting or hesitating to adopt technology risks losing sovereignty and becoming dependent on other nations. While we understand regulators’ concerns, excluding industry voices will repeat cycles of dependency. Dollar stablecoins are already used globally, and countries are preparing their own fiat-backed stablecoins. Even Japan, known for conservatism, has launched a yen-linked stablecoin. South Korea now stands at a crossroads in determining its position in the global financial industry.”
