Kakao Pay and Japan's PayPay announced on 25 September 2025 that PayPay users can now pay at more than two million offline merchants across South Korea using the PayPay application, without needing to obtain a Korean bank account, a local payment card, or a domestic digital wallet. The launch makes South Korea the first market outside Japan where PayPay has extended its acceptance network, representing the platform's inaugural international expansion and making Korean commerce accessible to a potential audience of 65 million registered PayPay users back in Japan. The announcement marks a meaningful step in the cross-border digitalisation of payments between two of Asia's largest consumer economies.
The arrangement is structured as a three-way collaboration involving Kakao Pay, PayPay, and Alipay+, the cross-border payments platform operated by Ant Group. Alipay+ provides the technical interoperability infrastructure that allows PayPay's QR codes to be processed seamlessly within Kakao Pay's Korean merchant acceptance network, enabling the two domestic champions to connect their ecosystems without requiring either to build a bespoke bilateral integration. This architecture allows both platforms to leverage their respective scale while sharing the technical overhead of cross-border connectivity through a single shared interface.
JAPANESE TOURISTS GAIN SEAMLESS ACCESS
The practical significance of the partnership is most immediate for Japanese tourists visiting South Korea, a corridor that has consistently ranked among Asia's busiest short-haul leisure travel routes. Japanese visitors had previously found that reliance on PayPay left them with limited digital payment options at Korean merchants, forcing many to carry cash or arrange alternative payment methods ahead of travel. The new arrangement allows them to use a familiar application in a foreign market in much the same way they do at home, reducing a tangible friction that has long characterised the inbound tourist experience for Japanese travellers in Korea.
For Korean merchants, particularly those in retail, food and beverage, entertainment, and tourism-adjacent categories, the expansion of accepted digital wallets represents a direct commercial opportunity to capture a larger share of inbound Japanese tourist spending. Importantly, merchants do not need to install separate hardware or sign individual agreements with PayPay; access is delivered through the existing Kakao Pay infrastructure they already use, keeping the integration cost and complexity on the merchant side close to zero. That frictionless on-boarding is likely to accelerate adoption across the two-million-plus merchant network.
ALIPAY+ MODEL SCALES ACROSS BORDERS
The three-way structure reflects a broader model that Alipay+ has been developing across Asia, positioning itself as a regional interoperability hub that connects domestic wallet ecosystems without requiring each pair of platforms to negotiate and build direct point-to-point links. By acting as the intermediary layer, Alipay+ allows PayPay and Kakao Pay to focus on their respective domestic strengths — user acquisition, merchant relationships, and product development — whilst extending their geographic reach through a shared technical interface that can in principle be replicated across a growing number of markets and wallet partners.
The PayPay-Kakao Pay corridor will be closely watched by other regional wallet operators as a live test case for this interoperability model. If the arrangement proves operationally robust and commercially successful in terms of transaction volumes and merchant satisfaction, it could accelerate similar deals across the wider Alipay+ network, which already spans multiple Asian markets. For PayPay, the Korean launch provides both a revenue opportunity and a strategic proof of concept for international expansion, potentially informing decisions about where in the region to extend its acceptance footprint next.