Accepting Payments in South Korea
Okay, so you’ve registered your business and have your business space. Now is the most important part, accepting payments! Your business is not a business if you aren’t making any money. If you are already helping people and providing your services to others, but aren’t making any money, then you are a charity, not a business. It’s not to say that you can’t be a charity, but it is important not to confuse the two. And there are obviously ways where you can have a business that has a charity aspect to it, but let’s focus on the business part for now.
Okay, so before we talk about the ways you can accept payments for your business, we need to make sure that you actually have people who are willing to pay you for what you offer. If you can get over optimistic like me and can be a little impatient (also me), then you may find yourself without a real sale for a week, a month, or even a year! If you can’t make a sale within a year, then you really got to re-think your business plan, but it isn’t uncommon not to make much money in your first few months of business. If you want to see how much I was making when I was operating my English Gyosoopso business in our first 3 months, 6 months, 1st year, 2nd year, 3rd year, and 4th year, you can click here and scroll to the graph near the bottom of the page. My wife and I didn’t make a large crazy amount of money at this time, but we did quite alright for ourselves. And I also made money on the side doing other things during those 3 years. And one of the side businesses became our main business, which we then sold for an amount we were happy with.
Well, let’s just assume you did your research, you are qualified, and you have an awesome product or service. You now need to ask your potential customer to pay you for what you have to offer. And let me tell you, it can be a little challenging to ask someone for a payment. But for the most part, if you have a good offer and can communicate that to your potential customer, she or he will ask how they can pay, so it’s not that difficult. But you have to make sure that you are confident in what you offer.
Most card machines accept credit cards and debit cards. And there are ways to issue a 현금영수증 (Cash Receipt) with your card machine, Depending on the card machine company, you will have to pay an upfront fee for installation and use of the machine. From my experience, this cost ranges from 200,000won – 350,000won. Once you pay the initial fee, you will be charged a percentage on each transaction. The percentage differs depending on the card that is used, but for the most part, the transaction fee will be about 1%-2% of the cost spent. Once you get your card machine, you will have to register your business number with the card machine company. The fee may or may not be calculated into the price they quote you, so make sure to ask if it is included with the price quoted.
*The above photo is of the card machine we used with Flower Gift Korea. I also had a card machine for my English Gyosoopso business. Technically, all businesses are legally required to have one, but I know for a fact that there are small businesses out there that say they do not have a card machine and will only accept cash.
Online Credit Card Payment:
Depending on your business model, you may or may not want to accept payments made online. And depending on your target market, you may want to go with a Korean company to help you process online sales. I personally only targeted English speaking customers for my online business, so I used paypal and 2checkout to process all of my online sales. To use paypal, you just have to connect your business credit card to your PayPal account, so you can receive sales under your business registration number. Your customer does not need a PayPal account to pay with PayPal since they can just use their credit card information. With 2checkout, the customer can either pay directly on the website or on the 2checkout website. There are other options you can use, like Stripe, but when I was running Flower Gift Korea, Stripe did not offer their services to Canadians or Koreans, so I was unable to use their service.
*The above image is a screenshot of the PayPal Korea website. I always just change the language to English to make my life easier.
A bank transfer is pretty straight forward. You just tell your customer how much they have to pay you and you provide them with your bank account information. Some people prefer a bank transfer since there normally aren’t any transaction fees. Sometimes people will request for a 현금영수증 (Cash Receipt), which you are legally required to provide. And you can use your card machine to issue the 현금영수증 (Cash Receipt) for your customer or client.
Cash is pretty self-explanatory. But with cash, you need to make sure that you can provide a receipt when it is requested. If you use your card machine, a receipt will automatically be printed, but when you receive cash, you may be asked to provide a normal receipt (영수증), which may not necessarily be a 현금영수증 (Cash Receipt). So you will have to buy some blank receipts and make sure to include your business information on the receipt. You can purchase the receipt templates in booklet form. They should cost less than 2000won for one pad of receipts and you can purchase them at your local stationary store. Also, it may be worth it to purchase a stamp that has all of your business information on it. That way you can just stamp the receipts with your business information, instead of writing all of your business information one at a time.
*The above is an image of the receipt we give out to people who ask for one when buying flowers with cash at our shop. When people pay with a credit card, they usually ask us to throw away the receipt since all credit card sales are automatically recorded.
*People usually request for a 현금영수증 (Cash Receipt) so that they can report the expenses in their income tax statement.
Congratulations! You are making money and are finally a REAL business. It is so amazing making your first sale!