High-Tech Entrepreneurship in Asia
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High-Tech Entrepreneurship in Asia

Innovation, Industry and Institutional Dynamics in Mobile Payments

Marina Yue Zhang and Mark Dodgson

The option for consumers to make payments for services and products via mobile telephones has created a dynamic new industry. High-Tech Entrepreneurship in Asia illustrates how small, entrepreneurial firms in Asia have devised and produced innovations crucial for this industry’s development.
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Chapter 6: The Development of Mobile Payment Technologies in Korea

Marina Yue Zhang and Mark Dodgson


INTRODUCTION Korea is at the cutting edge of mobile information technologies and has attracted attention from all over the world for its highly developed network convergence between mobile telecommunications technologies and the Internet. Korea’s success represents an excellent example of its vast broadband applications and achievement in innovation, building a converged network from a very low technological base in mobile telecommunications only a decade ago. Korea hardly had any advanced mobile telecommunications technologies before CDMA was introduced and commercialized in Korea in 1996. The government policies which encouraged a countrywide embrace of the CDMA technology have contributed to the evolution of mobile networks. According to the ITU case study of Korea’s mobile information society (ITU, 2004c), the second-generation (2G) networks 1 were first upgraded to 3G, 2 firstly to CDMA2000 1x 3 in October 2000 and then to CDMA2000 1x EV-DO 4 in January 2002 and EV-DV 5 in December 2004. In addition, in December 2003, Korea launched WCDMA mobile services in densely-populated areas in Seoul. To Koreans, their mobile handsets often represent their digital connections to friends, family and the whole world. In response to the country’s economic development, the mobile telecommunications industry has emerged as one of the two key export sectors 6 in Korea, with exports reaching US$30 billion 7 in 2004 (ICA, 2004). Korea leads the world in innovation and development of vast broadband applications as well as mobile commerce (ITU, 2004a). Mobile payment, one of the fundamental applications that facilitates mobile commerce over the...

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