[비즈한국] Kakao Pay377300 achieved its first annual profit last year, marking a significant milestone in profitability improvement. However, on the very day of its earnings release, it was hit with approximately 13 billion KRW in fines and an 'institutional warning,' casting a shadow over its future operations. In particular, as an institutional warning can influence the approval process for financial authorities, concerns are rising that it may act as a variable in pursuing new business ventures.
Shedding the ‘Perennial Deficit’ Label with First Annual Profit
According to the 2025 financial results disclosed by Kakao Pay on the 6th, last year's annual revenue reached 958.4 billion KRW, a 25% increase from the previous year. Operating profit was 50.4 billion KRW, marking the first annual profit in the company's history. This turnaround is attributed to the diversification of its business portfolio. The revenue structure, previously centered on payment services, has been redistributed into finance and platform sectors. Notably, financial service revenue surged 59% year-on-year, accounting for 40% of total revenue and emerging as a core growth engine.
Subsidiaries that had been weighing down consolidated results due to massive initial investment burdens also established stable revenue structures, contributing to the turnaround. Kakao Pay Securities hit a record high with trading volume reaching 45 trillion KRW, a 159% increase year-on-year, thanks to the recovery in the stock market. Consequently, it recorded 242 billion KRW in revenue and 42.7 billion KRW in operating profit for last year. Kakao Pay Insurance also continued its growth trend, bolstered by a diversified product portfolio and expanded sales channels. Its direct premium income for the fourth quarter was 19.6 billion KRW, an 87% increase compared to the same period last year.
Since its launch in 2017, Kakao Pay had been a 'perennial deficit' company that had never recorded an annual profit. After posting an operating loss of 27.3 billion KRW in its first year, it reported losses of 96.5 billion KRW in 2018, 65.3 billion KRW in 2019, and 17.9 billion KRW in 2020. The operating loss continued at 27.2 billion KRW in 2021, immediately after its listing. As investment burdens for subsidiaries added up, the losses widened to 45.5 billion KRW in 2022, 56.6 billion KRW in 2023, and 57.5 billion KRW in 2024.
However, the trend changed last year. After successfully turning a profit with 4.4 billion KRW in operating profit in the first quarter of 2025, it increased improvement margins to 9.3 billion KRW in the second quarter and 15.8 billion KRW in the third quarter. In the fourth quarter, it recorded 20.8 billion KRW, crossing the 20 billion KRW mark for a single quarter for the first time.
Kakao Pay stated, "We have established a trend of earnings turnaround by balancing growth and internal stability," adding, "We are strengthening the profit-generating capacity of our payment business and continuing to grow externally across all business sectors, including financial subsidiaries."
Currently Filing Administrative Lawsuit Against Personal Information Commission Ruling
While the task of improving profitability has been solved, Kakao Pay now faces another challenge: judicial risk. On the 6th, the day of the earnings release, the Financial Supervisory Service (FSS) imposed a heavy sanction on Kakao Pay, including an institutional warning and a fine of approximately 13 billion KRW. Two executives received sanctions equivalent to a warning or a cautionary warning, while three employees were subject to salary cuts or reprimands. The FSS had previously recommended a fine of approximately 15 billion KRW to the Financial Services Commission through its Sanctions Review Committee in April 2025. The final level of the penalty was confirmed after about 10 months of deliberation.
This action follows the confirmation that personal credit information was provided to third parties without customer consent. According to the FSS investigation, Kakao Pay provided approximately 54.2 billion instances of personal credit information (cumulatively 40.45 million people) to Alipay without customer consent between August 27, 2018, and May 21, 2024. The transferred information was found to include not only encrypted customer identification information but also sensitive data such as phone numbers, email addresses, and payment histories.
What is particularly noteworthy about this sanction is the 'institutional warning.' An institutional warning is considered a relatively high level of heavy sanction among financial company penalties. According to relevant regulations, a financial firm that receives an institutional warning cannot enter new businesses that require approval from financial authorities for one year from the date the sanction is confirmed. Furthermore, it can act as a disqualification factor in assessments of major shareholder eligibility, potentially placing restrictions on mergers, acquisitions, or equity investments involving other financial institutions.
Kakao Pay has recently been expanding its financial reach, including loans, insurance, and investments. This year, it unveiled plans to take a proactive approach toward next-generation financial sectors such as stablecoins, blockchain, and security token offerings (STO). During the earnings call on the 6th, Kakao Pay CEO Shin Won-keun stated, "I believe that opportunities linked to stablecoin projects currently under legislation, as well as blockchain and STO, will become important new business areas for Kakao Pay, and we intend to prepare for them diligently."
Stablecoins and STOs emphasized by CEO Shin all premise strict licensing or registration procedures according to the guidelines of financial authorities. While it is a time for the company to accelerate its efforts to secure a leading position in the next-generation financial market using its first annual profit as a springboard, concerns are rising that this institutional warning could create variables in the process of pursuing these new businesses.
Industry observers believe it is highly likely that Kakao Pay will take legal action against the FSS sanctions. Given that the institutional warning could burden future business strategies, it is seen as unlikely that they will accept it as is. In fact, regarding the act of providing personal information that formed the basis of these FSS sanctions, the Personal Information Protection Commission had previously imposed a fine of 5.968 billion KRW for violating the Personal Information Protection Act. At that time, Kakao Pay filed an administrative lawsuit to appeal the decision, and the trial is currently underway.
A Kakao Pay official stated, "We have sufficiently explained that we transferred information according to lawful procedures to prevent fraudulent transactions, but we regret that the authorities held a different legal judgment," adding, "We will carefully review the reasons for the financial authorities' decision and determine future response measures."