Mobile Finance Development, Theory and Operation Model: A Comparative Analysis of China and South Korea

Since 2000, mobile communication technology has made a breakthrough development, and more and more people use mobile phones to achieve more free communication. This phenomenon is particularly prominent in Asia. For example, in China, an emerging market with a large geographical area and a large population, demand in the mobile communication market is enormous. According to Pew Research Center survey data, the mobile phone penetration rate in China is 98 percent, and the penetration rate of smartphones is 68 percent as of 2019. South Korea, one of the first countries in Asia to commercialize 3G and 4G mobile networks, boasts of even more eye-catching performance in the mobile communications market: according to Pew survey data South Korea’s smartphone penetration rate reached 94 percent in 2019, ranking first in the world. With the development of 3G and 4G network technologies and the popularity of smartphones, a distinct mobile Internet has emerged as people access the Internet through their portable devices, and people spend more time surfing the Internet on these devices than on their computers. Noticing the opportunities brought by the mobile Internet, merchants have launched service platforms and applications suitable for mobile terminals such as smartphones and tablets to promote the sale of products and services. As a result, mobile e-commerce has become popular. Mobile finance, which includes services such as payment processing for mobile e-commerce, has also emerged as an important industry. This paper summarizes the development stages of mobile finance innovation, and analyzes the basis of the economics underpinning mobile finance using the two-sided market theory. We compare the differences of mobile finance models between China and South Korea, and analyze the causes of these differences.