[비즈한국] Kakao Pay377300 has announced its 2024 financial results. While revenue increased significantly due to growth in the financial services sector, the company failed to turn an operating profit. Although Kakao Pay emphasized that it is on a growth trajectory when excluding losses related to TMON and WeMakePrice (T-Wemep), significant problems remain. The company was recently fined billions of won after it was discovered that it had unauthorizedly leaked the personal information of 40 million users. With disciplinary actions regarding violations of the Credit Information Act due to providing information without consent still pending, all eyes are on how Kakao Pay will restore user trust.
"16 Billion Won in Net Profit Excluding T-Wemep Losses"
Kakao Pay, unable to avoid the aftermath of the T-Wemep crisis, recorded a deficit. Kakao Pay's operating loss for the fourth quarter of 2024 (consolidated basis) was 33 billion won, an increase in losses compared to the same period last year (21.5 billion won). On an annual basis, it recorded a loss of 57.5 billion won.
As a simple payment operator, Kakao Pay suffered T-Wemep-related losses of 31.2 billion won in the third quarter of 2024 and 300 million won in the fourth quarter, largely due to consumer refund support. Net profit turned positive in the fourth quarter at 5.2 billion won compared to the same period last year (-6.1 billion won), but it remains in the red for the full year (-21.5 billion won).
Kakao Pay maintains that it has "fared well" despite the T-Wemep crisis. It specified that if the T-Wemep losses are excluded, the annual net profit would have been 16 billion won. During a conference call held on the 4th, Shin Won-keun, CEO of Kakao Pay, stated, "As of the end of 2024, the number of Kakao Pay payment service users reached 24.02 million. Annual transaction volume exceeded 167 trillion won, and financial transaction volume surpassed 10 trillion won," adding, "Even though large merchants were lost due to the T-Wemep crisis, the number of overseas payment users, both online and offline, has increased."
In fact, revenue grew significantly last year. Revenue in the fourth quarter of 2024 was 218.2 billion won, a 31% increase from the same period last year (166.1 billion won) and a 17% increase from the previous quarter. Annual revenue reached 766.2 billion won, a 25% increase from the previous year (615.4 billion won). CEO Shin declared, "We achieved our target performance, including a 25% increase in revenue."
The growth was led by the financial services sector, which includes investments, loans, and insurance. Performance in the investment sector surged as overseas stock trading increased and the exchange rate rose. Its subsidiary, Kakao Pay Securities, achieved its first quarterly profit (700 million won). Financial services revenue in the fourth quarter reached a record high of 84 billion won. Compared to the same period last year (39.7 billion won), this is an increase of 111%. On an annual basis, it increased by 71%. Its share of total revenue also grew. The proportion of the core payment service business decreased from 70% in the fourth quarter of 2023 to 58% in the fourth quarter of 2024, while financial services increased from 24% to 38% during the same period.
For its 2025 strategy, Kakao Pay announced three directions: expanding value-added services, diversifying revenue through traffic-based businesses, and monetizing data. The plan is to increase traffic by expanding proprietary content and actively cultivating non-financial businesses through it. It also unveiled plans to sophisticate service personalization by utilizing "MyData" and user logs.
It is also expanding the adoption of AI. Kakao Pay is currently piloting AI technology in its insurance diagnosis service, which provides appropriate insurance coverage based on a user's health status. This year, it announced plans to pursue a "consumption agent" to manage personal spending habits beyond insurance.
Providing Information to Alipay Without User Consent… Disciplinary Action from the Financial Services Commission Still Pending
Although Kakao Pay emphasized the growth of its payment services, measures to restore user trust appear necessary. CEO Shin Won-keun mentioned on the day, "We will grow into a company that fulfills its social responsibilities." On January 22, Kakao Pay received a fine of 5.968 billion won and a corrective and public notification order from the Personal Information Protection Commission (PIPC) as a sanction for violating overseas transfer regulations under the Personal Information Protection Act.
In August 2024, the Financial Supervisory Service announced that Kakao Pay had been unauthorizedly leaking users' personal credit information to Alipay for six years. Alipay acts as an agent for NSF (customer-specific credit score) calculation, payment processing, and settlement while providing integrated services for Apple's in-app payment system. Kakao Pay provided personal credit information with low-level encryption to Alipay without receiving user consent. Alipay is the second-largest shareholder, holding a 32% stake in Kakao Pay.
According to the PIPC, Kakao Pay provided the personal information of all its users to Alipay, an Apple contractor, to build a model for calculating NSF scores between April and July 2018. From June 2019 to May 21, 2024, it sent personal information daily so that Alipay could calculate NSF scores for each user.
The cumulative number of personal information records sent by Kakao Pay to Alipay reached 54.2 billion. This included the personal information of Android users who do not use Apple devices. Alipay used the information received from Kakao Pay to calculate NSF scores for each user and provided them immediately whenever Apple requested a payment user's NSF score.
The PIPC stated, "We have confirmed that Kakao Pay provided the personal information of all users to Alipay for the purpose of evaluating Apple's service users without the users' own consent," adding, "Users were unable to know which of their information was transferred overseas. Furthermore, Apple did not inform users that it was transferring personal information overseas through Alipay for processing." The PIPC also imposed a fine of 2.405 billion won and a penalty of 2.2 million won on Apple and issued a corrective order to Alipay to destroy the NSF score calculation model.
Meanwhile, the Financial Services Commission is expected to separately impose sanctions under the Credit Information Act regarding the fact that information was provided to a third party without user consent. Kakao Pay has not yet implemented the PIPC's sanctions. Regarding the results of this disposition, Kakao Pay responded, "We are reviewing various response measures."