Kakao Pay Bets Big on Small Business: 100-Brand Recruitment Signals Ecosystem Ambitions

Kakao Pay has announced a landmark expansion of its small business support campaign, "Orae-Orae Hamkke-Gage" (loosely translated as "Long-Term Partnership Store"), increasing its 2026 brand recruitment target by 67% to 100 companies — up from 60 in 2025. More significantly, the program is pivoting from its online-only roots to embrace offline, brick-and-mortar brands for the first time. This strategic shift comes at a pivotal moment: Kakao Pay posted its first-ever annual operating profit of 504 billion won in 2025, and securities analysts project 2026 operating profit to surge 105.6% to 103.7 billion won. The company is clearly leveraging newfound profitability to build a comprehensive SME ecosystem that could reshape the competitive dynamics of South Korea's fintech landscape.

What Is the 'Long-Term Partnership Store' Program?

Launched in 2023 as a collaboration between Kakao Pay and the Together Working Foundation (함께일하는재단), the program identifies high-potential small business brands and provides them with an Integrated Growth Package designed to accelerate their development. Eligible applicants must be small business owners with fewer than 10 full-time employees who can provide SME certification documentation.

The selection process is conducted by an expert panel that evaluates candidates across four dimensions: product attractiveness, brand story, mutual growth value, and growth potential. Selected brands receive a comprehensive support suite that includes dedicated online and offline sales channel access, branded promotional content creation, customized financial and marketing education, and digital transformation tools powered by Kakao Pay's proprietary solutions — including its merchant management platform "Boss Plus," QR payment systems, and the signature "Chunsik QR" ordering solution.

For 2026, applications close on April 13, with final selections announced on April 28.

Three Years of Proven Impact: 264 Brands, 400,000 Consumers

The program's three-year track record provides compelling evidence of its effectiveness. From 2023 through 2025, Kakao Pay discovered and supported 264 small business brands, establishing dedicated sales channels through pop-up stores and online marketplaces. The initiative connected these businesses with a cumulative 400,000 visitors, dramatically boosting brand awareness for participants who would otherwise struggle to reach consumers at scale.

The financial impact has been substantial. By directly supporting pop-up store operations — covering space setup, merchandising staff, and marketing — the program saved participating brands approximately 6.44 billion won in operating costs and 151,824 hours of operational time compared to self-managed store operations. Education programs achieved a remarkable 98.2% satisfaction rate, and the campaign earned an official commendation from the Small Enterprise and Market Service (SEMAS) Director.

These results underscore why the 67% expansion for 2026 is more than incremental growth — it represents a validated model being scaled with confidence.

The Online-to-Offline Pivot: Kakao Pay's Strategic Masterplay

The most consequential change in the 2026 program is the extension of support to offline, location-based brands — bakeries, cafés, workshops, and local artisan businesses that operate physical storefronts. This isn't an isolated initiative; it aligns with Kakao Pay's broader offensive in offline payments.

Kakao Pay has been aggressively building its offline payment infrastructure through QR-based table ordering and payment systems. Monthly offline payment users surpassed 5 million in July 2025 — a first among Korean mobile payment providers — and offline transaction volume has been growing at 46% quarter-over-quarter. The company has set an ambitious target of 10 million offline payment users by 2027.

To achieve this, Kakao Pay has built an alliance network with major VAN and POS providers including KIS Information & Communications, NICE Information & Communications, OKPos, Beaverworks, and UnionSoft. Integration with the government-backed Zero Pay system has further expanded Kakao Pay's offline footprint to 1.1 million merchant locations. Crucially, Kakao Pay applies the same commission rates as standard offline card payments, minimizing cost barriers for merchants.

The convergence of these two strategies — brand incubation through the Partnership Store program and payment infrastructure expansion through QR systems — creates a powerful flywheel. Small businesses get customers and digital tools; Kakao Pay gets transaction volume and platform stickiness.

The Toss Rivalry: Hardware vs. Software Approaches to SME Dominance

Kakao Pay's SME ecosystem push inevitably places it in direct competition with Toss, South Korea's other fintech heavyweight. The two companies have adopted fundamentally different strategies for capturing the small business market.

Toss launched its proprietary hardware — the "Toss Terminal" and "Toss POS" — in 2023, bundling payment terminals, POS systems, receipt printers, and kiosk functionality into a single package offered at zero or minimal cost. The results have been explosive: Toss reached approximately 200,000 merchant installations by September 2025, doubling from 100,000 in just seven months. Toss's approach is essentially a hardware-led land grab — replace the existing payment infrastructure and lock merchants into the Toss ecosystem.

Kakao Pay, by contrast, pursues a software-and-services strategy. Rather than deploying proprietary hardware, it partners with existing VAN/POS providers to layer QR payment and ordering capabilities on top of merchants' current systems. The Partnership Store program adds another dimension: instead of just processing transactions, Kakao Pay actively invests in growing merchants' businesses through marketing support, education, and sales channel development.

This creates an interesting strategic divergence. Toss wins on immediate, tangible value — free hardware and simplified operations. Kakao Pay wins on long-term relationship depth — comprehensive growth support and the massive reach of the Kakao ecosystem (KakaoTalk's near-universal penetration in South Korea provides unmatched distribution).

Naver Pay has also entered the fray with its "Naver Pay Connect" initiative targeting online-to-offline integration, setting the stage for a three-way battle among Korea's tech giants for small business loyalty.

Government Tailwinds Amplify the Opportunity

The timing of Kakao Pay's expansion coincides with unprecedented government support for small businesses. The Ministry of SMEs and Startups has allocated a record 5.4 trillion won for SME support in 2026, with 1.341 trillion won earmarked across 26 programs spanning seven categories — a 64% increase from the previous year. Key policy priorities include AI and digital transformation support, platform-corporate mutual growth partnerships, and local entrepreneurship development.

Kakao Pay's Partnership Store program aligns precisely with these policy objectives, particularly the government's emphasis on platform companies collaborating with small businesses for mutual growth. Additional regulatory catalysts, including stablecoin legalization and expanded AI integration frameworks, could further strengthen Kakao Pay's competitive position.

The broader fintech market provides additional context: the global fintech market reached $370.4 billion in 2026 and is projected to grow to $760 billion by 2031, with offline integration and SME services representing key growth vectors.

How to Maximize the Opportunity

For small business owners considering the program, the application window closes April 13, 2026. The evaluation criteria emphasize brand story and mutual growth values alongside product quality, so applicants should focus on articulating their unique narrative and community impact rather than purely commercial metrics. Selected participants gain access to the full Integrated Growth Package — including free digital solution implementation, professional marketing content, and dedicated pop-up store support.

For consumers, the Partnership Store online mall offers curated access to emerging small business brands, often with Kakao Pay-exclusive promotions. Periodic pop-up store events provide opportunities to discover products in person, and using Kakao Pay for transactions frequently unlocks additional rewards and cashback offers.

For investors and industry observers, the expansion of this program is a leading indicator of Kakao Pay's strategic direction — monetizing its ecosystem not through aggressive fee extraction but through volume-driven growth anchored in genuine merchant value creation.

Conclusion: The SME Ecosystem War Has Only Just Begun

Kakao Pay's 67% expansion of the Long-Term Partnership Store program and its decisive pivot to offline brand support represents far more than a corporate social responsibility initiative. Built on three years of proven results — 264 brands incubated, 400,000 consumers connected, 6.44 billion won in savings delivered — and integrated with a rapidly growing offline payment infrastructure spanning 5 million monthly users and 1.1 million merchant locations, this is a strategic ecosystem play designed to make Kakao Pay indispensable to small businesses. As Toss pushes hardware-led expansion and Naver Pay advances its own O2O strategy, Korea's small business owners find themselves at the center of a fintech platform war that promises them more digital tools, lower costs, and greater growth opportunities than ever before. The winners of this ecosystem war won't be determined by which platform deploys the most terminals — but by which one truly helps small businesses grow.