KakaoPay Corp

KRX:377300

Earnings Call Transcript

[Operator]

[Interpreted] Good morning and good evening. Thank you all for joining this conference call. And now we will begin the Conference Call of Fiscal Year 2023 Fourth Quarter Earnings Results by Kakao Pay. This conference will start with a presentation followed by a divisional Q&A session. [Operator Instructions]

Now, we shall commence the presentation on the fiscal year 2023 fourth quarter earnings results by Kakao Pay.

[Won-geun Shin, executive]

[Interpreted] Hello. This is Allen, the CEO. I would like to thank the analysts and fund managers, as well as other participants for joining Kakao Pay's earnings call for Q4 of 2023.

We will begin with key business metrics for Q4 of '23, then move on to TPV, consolidated basis revenue and expense, P&L and performance highlights, after which we will go into 2024 strategic direction. First highlights from 2023 business performance.

FY '23 TPV was KRW 140.9 trillion, up 20% year-over-year. Revenue TPV was up 20% on-year, exceeding KRW 40 trillion for the first time, reaching KRW 40.7 trillion. Full year revenue increased 18% on-year, reporting KRW 615.4 billion. Net loss for '23 was KRW 25.2 billion and EBITDA reported minus KRW 24.8 billion. Financial income came in at KRW 68.2 billion.

Moving on to business metrics. MAU as of end of Q4 '23 was 24.1 million, driven by MAU growth from payment service and Kakao Pay app MAU. Transaction count per user was up 4% year-over-year, reaching 105 transactions and number of online and off-line payment transaction increased 12% year-over-year. Number of on and off-line merchants increased 18% year-over-year, securing around 1 million merchants. Overseas payment service was integrated across 50 nations and regions, including Asia, Europe, and the Americas.

Next, CFO, [ Aidan ], will run through the details of Q4 TPV.

[Seong-ho Lee, executive]

[Interpreted] Hello. I'm [ Aidan ]. Q4 TPV was KRW 38.1 trillion, up 23% year-over-year. This is around KRW 1.8 trillion rise every quarter on average for year 2023. Revenue TPV was up 28% year-on-year, reaching above KRW 11 trillion, accounting for 29% of aggregate TPV. Across all of the service domains, we saw a double-digit TPV growth this year. Payment was up 11% and 34%, respectively, for online and off-line, while total digital payment service recorded 19% growth. Financial services TPV posted 76% growth, driven by TPV growth year-over-year across all of the loan product categories.

In the same period, Kakao Pay Securities' stock trading volume was up 279% versus last year. Money transfer also showed 22% uptrend year-over-year and Kakao Pay Money balance reached KRW 1,236.6 billion, which is up 48% year-to-date. This was mainly driven by 5% standard interest on deposits with Kakao Pay Securities account and higher usage of MTS. With the uptrend in the money balance, we expect stronger financial ecosystem to form around Kakao Pay Money, which is expected to contribute to the overall profitability of the company.

Q4 revenue was KRW 166.1 billion, up 35.2% year-over-year and 4.6% Q-on-Q. Payment service revenue was KRW 117 billion, up 15.8% year-over-year and 3.1% Q-on-Q, with the year-end spending season and the onboarding of Kakao Pay on the 11th Street platform, we saw growth in online payment. Overseas payment revenue expanded twofold versus last year, in particular, attesting to its upside potential.

Financial service revenue was KRW 39.7 billion, which is up 5.4% Q-over-Q. All of the financial services, including loans, insurance and stocks showed quite steep year-over-year uptrend. In particular, Kakao Pay Insurance saw a fast uptake in travelers insurance, driving insurance's share of revenue to be double-digit against the total financial revenue. Driven by revenue stream from the platform, including advertisement revenue, other services revenue reported a Q-over-Q growth.

Q4 operating expense was KRW 187.6 billion, up 29.3% year-over-year and 11.4% Q-on-Q. On the back of commissions paid through card companies following higher credit card payment revenue and KRW 5.6 billion annual expense for MyData business, commissions paid was up 16.7% year-over-year. Labor cost was up 41.5% on-year due to the year-end bonus and recognition of liabilities on the sabbatical leave. Marketing expense was down 6.8% year-over-year on the back of cost control efforts with spending accounting for 9.1% against revenue on a per annum basis sustaining the 10% spending threshold. Operating expense on a Q-over-Q basis increased 11.4%, mainly due to the impact from MyData and labor cost recognition. In Q4, expenses booked was KRW 16.6 billion and with these impacts removed, level of spending was flat on Q-over-Q basis.

Consolidated operating loss for Q4 hence was KRW 21.5 billion. EBITDA reported negative KRW 13.2 billion with net loss at KRW 8.4 billion. Once again, this is due to MyData-related expenses and labor costs booked in the fourth quarter. Q4 financial income reported KRW 19.9 billion with FY '23 financial income coming in at KRW 68.2 billion.

Fourth quarter stand-alone revenue reported KRW 149 billion, up 23.1% year-over-year and 5% Q-over-Q. Separate basis, operating profit was KRW 2.3 billion for Q4 and FY '23 full year operating profit came in at KRW 32.8 billion. Now, excluding the impact from MyData business and labor cost, operating profit outperformed previous quarters. We will continue to work to bring better results in 2024, underpinned by efficient spending and top line growth.

Next, I will invite Jason to present on key performance highlights of the fourth quarter.

[Unknown Executive]

[Interpreted] Hello. I'm Jason, heading the Business division. I will begin with the digital payment in Q4 which has sustained the growth trend over the quarters with strategic category-centric approach placed behind merchant expansion. Kakao Pay has actively secured merchants in categories where we projected users' transaction, growth such as from cafes, CVS, duty-free and airlines, and accordingly made preparations in advance to be able to offer payment convenience to our user base. These efforts led to a sharp rise in number of transactions and TPV in the said categories versus last year. As such, Kakao Pay will continue to offer payment convenience targeting the underlying needs of people's daily lives. Specifics will be shared when Allen talks about the strategic plan for 2024.

Now, regarding overseas stock trading, which the investors I know have shown quite a bit of interest on, both inbound and outbound payment and TPV continued on a growth trajectory. We are seeing recent growth, especially from China's commerce platform and user activity measures are also uptrending from the merchant base. We expect off-line payment to be further activated with more inbound tourists expected in 2024. Hence, we are trying to grow the merchant base in order to facilitate ease of payment for foreign visitors around places that they visit frequently. Cross-border payment performance has been good so far and we will do our best to continue to drive those good results.

Next is on loans. Loan TPV in Q4 hit record high quarterly figure. We expanded our referral scope from credit loans to include mortgages, auto and Jeonse loans, with such non-credit loan products now expanding to 19% share of the total loan TPV. Thanks to efficient allocation and targeting of loan demand traffic, TPV for credit loans increased 49% year-over-year and 384% for non-credit loans on a year-over-year basis.

We expect loan TPV and demand for loan inquiries will grow significantly as government-led refinancing program will apply to mortgages and Jeonse loans starting January of 2024. Data built up from offering such referral services for credit and non-credit products and know-how we gain will be used in operating a user-friendly loan brokering services. We expect growing number of financial partners going forward, which will broaden users choice for the most optimal loan product.

Next, Jeff, who is the Head of Services, will present on key Q4 performance highlights for Kakao Pay Securities, as well as Kakao Pay Insurance. [Interpreted] Hello. This is Jeff, and I'm in charge of Services division. I will begin with Kakao Pay Securities. Asset under Kakao Pay Securities, including fund, stocks and deposit, reached KRW 2.23 trillion as of December '23. The rise has been quite steep, posting 95% increase year-over-year.

In Q4, domestic trading volume dipped, but on growth from overseas stock trading, there was 279% year-over-year growth. It's also worth noting that December's monthly trading volume was record high at KRW 3.4 trillion. Driven by trade tournament, collecting stocks, which are unique service offerings that we provide, number of transactions was up 249% versus last year. And by securing a steady basis for stock trade, Kakao Pay Securities will expand its top line, standing resilient against market volatilities.

Next is on Kakao Pay Insurance. Following the launch of travelers insurance by Kakao Pay Insurance, it went viral, thanks to the ease of signing up through KakaoTalk, with more than 10,000 people taking out the insurance every month, and in December, 136,000 people signed up writing a new record. As more policyholders sign up and pay through Kakao Pay, a positive feedback is formed with payment features of Kakao Pay, as well as with Kakao Pay app.

And in December, we launched Insurance to provide coverage for mobile phone breakages. Just like the travelers insurance, users can design the insurance policy to fit their personal usage habits, setting the scope and coverage, and if the phone is never broken, users will receive 10% refund. As such, we plan to continue on with our own story of offering user-driven insurances and protect against daily safety incidents.

Next, before we close today's presentation, Allen, will run through the company's ESG efforts and 2024 strategy.

[Won-geun Shin, executive]

[Interpreted] This is Allen again. Kakao Pay was recognized for its ESG excellence and became a new joiner in 2023 Dow Jones Sustainability Korea Index. We are now the only fintech company from financial services sector listed in those 2 indices, which are DJSI Korea and S&P Global's Large-Mid-Cap ESG. Leveraging our strength as a fintech player, we're preparing shared growth programs so that we can support small business operators and those who are financially underprivileged. From supporting payment and sales channels for small vendors to providing financial education to those who are digitally underprivileged, Kakao Pay will do its part in making a better society by doing what we are good at.

Now, on Kakao Pay's 2024 strategic direction. During FY '23, we focused on expanding key merchants and overseas payment capabilities and bring growth to our loan product portfolio and strengthen services for stock trade. Underpinned by such efforts, in 2024, Kakao Pay is committed to making The Leap to become the #1 daily financial platform. The Leap will be fueled by off-line payment, innovating user experience for financial product brokerage, and tailored financial services underpinned by MyData.

First is digital payment. Payment is our flagship service most liked and used by Kakao Pay user base, which actually offers great level of convenience. But even to this very day, compared to online ubiquity, off-line usability was not up to par. This, I admit as a user myself and the CEO of the company was the biggest pain point and challenge I faced. And by the first half of '24, I believe I will be able to share with all of you a solution to this problem. In April, Kakao Pay will embed Samsung Pay, which means they can rapidly expand off-line acceptance. And once this is done with an Android phone, there will be almost 100% Kakao Pay coverage of merchants who we frequent while engaging in our daily lives. We are also thinking hard about a way forward for iOS devices to leave no users behind in bringing the slogan to life. Together with a strong off-line presence through all around benefits for enhanced services, we believe we can bring great changes to Kakao Pay's digital payment business.

Second is making The Leap in digital financial services. The success of Kakao Pay Insurance' travelers insurance, showed how our unique approach can actually work even in the business of insurance. Following this success, we plan to launch diverse array of distinctive product of Kakao Pay Insurance that provide protection against wide range of everyday safety risks. We have product pipeline of 4 different categories of digital, leisure, life and embedded, and we will be able to update you in the upcoming earnings calls on the details and performances of the specific product lineup.

For loan referral service, following wider application of refinancing program to mortgage and Jeonse loans, we've seen accelerated trend of secured loans coming onto the online platform. Through fluid process from discovery to origination of such loans and to the use of MyData to offer the most optimal terms and conditions, we plan to drive up revenue from brokering the loan services.

For investment, Kakao Pay Securities is upscaling to drive investment by leveraging its strength as a community-based financial platform, generating greater level of investors' interest. We're developing bots for stock trade, which is now under a pilot so that we can eventually bring that service to our users and are making enhancements to features that link up to KakaoTalk. By providing unique user experience true to who we are across insurance, loans and investments, we will improve user satisfaction and make that leap in becoming that #1 daily financial platform up close to where our users are.

Next is expansion of tailored financial services and business expansion underpinned by the use of data. Our development efforts during last year were around dynamic home and specialized services that better cater to the needs of each user segment. Overseas travel home service and the home service for the younger segment are good examples. For instance, if you're taking a trip to Japan, the home screen will show you information on the acceptance points and currency exchange rate. If you are a teenager under 18, lunch menus at the canteen, timetable for classes and curriculum will show up on your home screen. We will present a more personalized and tailored financial services specific to the segmented needs and characteristics, starting off with people taking overseas trips, young teens and expanding into other segments such as senior citizens leveraging off of the experience we gain in the process.

Lastly, we will upscale and formalize our MyData base businesses. We are currently offering tailored services in some segments supported by more than 14 million users connected based on MyData system, but there's still a lot of room for scaling up and creating added value. Based on financial data analytics, we are working on a more sophisticated connection and recommendation engine and depending on different contexts, for insurance, financial product referrals and investment advisory services. By leveraging the data built inside Kakao Pay, we can also explore ways to offer services to an outside third-party.

So this brings me to the end of our 2024 business objectives and direction forward, which we've been working hard together with Kakao Pay group. We'll do our utmost to make this leap and bring ease of daily financial life to all of Kakao Pay users. Thank you.

[Operator]

[Interpreted] [Operator Instructions]

The first question will be presented by Dong Woo Kim from Kyobo securities.

[Dong Woo Kim, analyst]

[Interpreted] I understand in year 2023 the cross-border business was the main driver behind your payment business growth. What would be the key engine behind the growth that you project in terms for year 2024? And also it will be helpful if you could provide some color regarding Kakao Pay's strategic direction forward and how do you plan to differentiate yourself vis-a-vis your competitors on both online, off-line and in your cross-border business?

[Unknown Executive]

[Interpreted] Hello. This is Jason. I will respond to your first question on cross-border business. As you've correctly mentioned, cross-border payment will be a very important growth factor in 2024 as well. We expect cross-border and off-line payment business to be very important growth drivers for Kakao Pay's payment business in year 2024. The goal of the payment business for us in 2024 is to be top of mind payment service in the minds of our user base by enhancing user experience and also user satisfaction and eventually to be #1 in terms of growth rate in the fintech industry.

Now, to achieve this strategic goal, we will focus on, first, expanding our share in the domestic commerce, including on different platforms such as KakaoTalk, Gift, 11th Street, Timon and WeMef, where Kakao Pay has strength. And also we plan on strengthening cooperation with Chinese merchants such as with AliExpress and Tmall, whose growth rate recently has been quite steep. We also plan to expand partnerships and collaborations, as well as identify some strategic merchants from high-growth categories in line with the changing trends that we see in online payment. Through all of these efforts, we plan to continue to secure a stable profit base while continuing the growth trend vis-a-vis the market and competitors.

Now, moving on to off-line payment. Kakao Pay for all off-line payment, so all you need is Kakao Pay will be the slogan and it is a clear way forward for us to offer consistent user experience. We plan on covering off-line payment methods such as barcodes, QR payment, scan, mag stripe Samsung Pay and NFC for transportation and improve usability, as well as product quality and expand the overall merchant coverage so that we can secure new user base. All of these efforts will facilitate our effort in further triggering user activation, as well as merchant activation based on the all-around benefits we offer them.

Now for cross-border payment, we plan to focus on expanding coverage in untapped countries and drive TPV in core countries such as Japan, China and Macau. While the expansion of acceptance across different countries was the main agenda for us in 2023, this year, we plan to solidify our position as a leading cross-border payment provider through enhanced convenience and developing outbound services, and by providing more benefits and completeness of the services will be further scaled up as well. It will mean more than simply adding number of countries, but also about expanding acceptance coverage within each country as well.

In terms of point of differentiation vis-a-visa the competitors that we have, we not only support payments, but we can also link up with rewards and points programs at merchants through Kakao Pay. We can also provide customized benefits using MyData and also connect payment and deposit products. For off-line, Kakao Pay is available also on Android, iOS and watch and we have the widest merchant coverage compared to our competitors from large franchises to small business operators. For cross-border, the biggest differentiator is the [ LXA ] factor, which helps us in driving the expansion.

[Operator]

[Interpreted] The next question will be presented by Kwang Myung Jung from DB Financial Investment.

[Kwang Myung Jung, analyst]

[Interpreted] I have 2 questions. The first one, can you guide us on what your 2024 top line and TPV projections are and guidance is for the whole year? And when do you think it's going to be the timing for you to achieve turnaround in profit?

Second question relates to your Insurance business. I understand that the performance from the travelers insurance was quite good and you also recently released and launched a mobile phone insurance. What are some of the products that we can expect in the pipeline for the insurance product for 2024? If you could share with us the details, that would be greatly appreciated.

[Seong-ho Lee, executive]

[Interpreted] Hello. This is Aidan. I will respond to the question on the guidance. Now, despite fierce competition that we see in the easy pay market in year 2024, we're actually looking forward to a double-digit growth. For TPV, we're looking at about 20% to 30% growth, and for top line revenue, about 15% to 25% growth is our projection. Now, if you break down that '24 guidance into different business areas, first, looking at payment. With solid online growth and overseas payment expansion and onboarding of Samsung Pay and other payment methods, we believe that this would drive meaningful TPV growth going forward. Through this, off-line coverage will rise quite sharply, so we expect triple-digit year-over-year off-line TPV growth. And with Kakao Pay Money playing a pivotal role for us as we expand the ecosystem, we expect revenue stream to be quite stable, while TPV growth will be fueled by off-line and revenue growth will be supported by cross-border.

Now, looking at digital finance business, we expect higher growth from digital finance with the rollout of refinancing services for mortgages and Jeonse loans, a new product lineup from P&C, the non-life insurances. TPV will be driven by loan referrals with refinancing program driving added contribution. A new product lineup is expected also to drive the growth in terms of revenue.

Now, looking at other services, we believe that there will be an year-over-year growth that is supported by a more expanded revenue from advertisement and also advertisement triggered by the MyData business.

In 2024, macro uncertainties will continue to prevail following the backdrop in '23. If you look at the recent decisions on the MyData tariff program and the regulation environment regarding payment and financial services, the regulatory environment basically is not to our advantage. Having said that, we will continue to expand our off-line coverage so that people can use Kakao Pay wherever they wish, and we will continue to roll out a unique and distinct insurance product lineup that is a key differentiator of Kakao Pay. And also, we will continue to give more benefits to the users of Kakao Pay app.

In terms of the turnaround, through the expansion of our core fundamental business and by fueling a steep growth from our subsidiary businesses, we will seek to achieve a turnaround in profit. We will continue to exert our efforts to achieve cost efficiency and really build out a structure for a turnaround and we will do our best to achieve the 2024 guidance.

[Unknown Executive]

[Interpreted] Hello. This is Eddie. I will respond to your question about our Insurance business. Now, as you've correctly mentioned, the overseas travelers insurance continue to rewrite record sales every month, and according to our internal statistics, according to excluding the GAs, the GA agencies and long-term overseas insurance, we've achieved the #1 position in the direct overseas travelers insurance market in terms of number of policies. Performance continues to uptrend and we expect stable sales growth in '24 as well.

And also, we are looking forward to positive results from the recent launch of our mobile phone insurance which was launched recently. Now, mobile phone market is growing very rapidly around MVNO and SIM-only phones and since there is no insurance for mobile phones, we will be able to serve this untapped segment of the market. Insurance for mobile phones are currently offered as part of value-added services by telcos for their own subscribers, but with more MVNO and SIM-only users, there is an unmet need. We, therefore, will target that need by, number one, reducing the burden, the level of premiums by allowing the policyholders to fix the number of claims that they can ask for compensation as many times as they wish and give discounts for longer insured duration and giving that refund of 10% at maturity if no damage was done.

Now, if you look at the number of people who replace their cell phones in a year, it's estimated to be around 27 million. The penetration rate of cell phone insurance is estimated at around 20%. If our mobile phone insurance also goes viral, like the travelers insurance, driven by convenience and refund features, penetration and the user base will naturally grow as well. We expect also short term demand to increase with the launch of flagship smartphones models, which will begin or which have begun from the end of January.

For the new lineup of insurance products to be added in '24. Basically, it is being developed across 3 broad categories. First is digital such as mobile phone insurance against breakage of the mobile phones; second is, leisure such as what overseas travel and driver's insurance, and third is life. And in addition, when it comes to selling and distributing these insurance products, we will not only sell them through Kakao Pay platform, but also expand sales channel through B2B by finding partners optimized for these products. In fact, already on January the 8th, we started selling group overseas travel insurance with [indiscernible] and we are in discussions with other partners from industries such as OTAs, car companies, duty-free shops for further expansion.

Now, as you can see, Kakao Pay Insurance aims to grow by providing new insurance experience that has never existed before, while solving along the way the pain points that users have and have experienced in the current insurance market.

[Operator]

[Interpreted] The next question will be presented by John Yu from Citi.

[Incheol Yu, analyst]

[Interpreted] Hello. I'm Yu, Incheol from Citi. Before going into the 2 questions that I have, just want to double-check following up on your guidance-related question and answer. Is my understanding correct that your revenue guidance is actually lower compared to your TPV growth rate, is that correct? And also for turnaround, so are you saying that your turnaround objective is set for this year?

Then moving on to my question, first on payment. Regarding the cross-border segment, if we look into more specific segment, which is the China-based e-commerce companies like Ali and Tmall, the growth rate has been quite steep. I would like to understand as to with regards to these Chinese-based cross-border payment TPV, what is the growth rate profile look like? And out of the total cross-border TPV that they have, what is the share that Kakao Pay actually accounts for out of that total TPV figure?

Second question is on cost. You've mentioned MyData business-related expenses, the one-off expenses that's been incurred. Can you give us some more detail and color on that point? And since you are planning to expand your MyData business this year, what do you think is going to be the related cost for this year?

[Seong-ho Lee, executive]

[Interpreted] This is Aidan. I will respond to your question on guidance, cost and turnaround timing. Your understanding is correct. On our guidance, we are guiding TPV growth of 20% to 30%, revenue 15% to 25%. So you're right that TPV growth projections or guidance is higher. Now, this was a strategic decision on our part starting last year. Regarding the TPV, according to our business plan, with the onboarding of Samsung Pay and expanding the payment coverage, off-line payment coverage, as well as expanding various different payment-related services, those would be the key drivers behind the high-growth rate of TPV. On the revenue side, the drivers are going to come from financial services, the revenue growth from insurance and securities business. But you would understand that, that will be more pronounced as we go into year 2025 versus '24 and hence, that is the reason why the TPV guidance is higher.

In terms of the timing for the turnaround, we have to be quite realistic on this part. We will continue to expand our fundamental core businesses while driving up our TPV and also drive up the revenue from our financial subsidiary as we go through year 2024.

In terms of cost efficiency, we've been able to achieve structural cost efficiency back in 2023, but since there is still a macro headwind, we will continue to work on achieving further efficiencies going forward. So rather than being more short-term minded in terms of achieving that turnaround timing in year 2024, we want to take on a more longer term horizon and supported by a most efficient cost structure, we will continue to drive our revenue growth and we'll make strategic decisions to be able to achieve that turnaround in 2025.

Regarding your question on cost, as we've mentioned previously, the biggest impact on a Q-on-Q basis were Q4 expenses was labor cost and commissions. Now, there was KRW 11 billion of additional liabilities booked because of the year-end bonus and for the liability for the sabbatical leave.

And in terms of commissions, with the determination of the pricing scheme for MyData, which was decided in early January, there has been an impact of a KRW 5.6 billion expense as booked under Q4 cost. Now, the way MyData-related costs are booked is that, basically, the cost for billing is based on the share of periodic data transfers, after which the cost is allocated according to the number of times the API was called. So at this point, we cannot make an exact projection as to what that amount actually is, but we will very closely monitor how it plays out going forward.

[Unknown Executive]

[Interpreted] Hello. This is Jason. I will respond to your question on the cross-border, the Alipay question. Now, Kakao Pay was the first payment company to interlink with AliExpress and Tmall and has grown together as they expanded into domestic market. We actually run promotion together with AliExpress every year, including for the biggest event of the year which is the Lunar New Year. And also, if you look at Tmall, the TPV uptrended actually every month since Kakao Pay became the first payment service provider to integrate the payment service back in August '23, and currently discussions are underway for a more full scale collaboration going forward.

Now, having said that, please understand that I won't be able to disclose the breakdown of Kakao Pay's market share number, but I can say that Kakao Pay was the first payment provider to enter the market and that it maintains a leading position. And once other payment providers are embedded and marketing is launched on a full-fledged basis in '24, competition for market share can be more intense. But Kakao Pay intends to solidify its position as a leading provider in '24 by securing and providing ubiquitous services and providing the user benefits.

[Operator]

[Interpreted] The next question will be presented by Minwook Na from DS Investment & Securities.

[Minwook Na, analyst]

[Interpreted] My first question relates to your decision not to acquire the second batch of Siebert shares. I would like to understand what the business and financial impact may be? And do you have other strategies to activate your overseas stock trading business?

Second question is that, you did present on 2024 strategic direction for the company. I know that it includes different new businesses and initiatives. But if you could elaborate a little more on the overall direction in terms of strategy for '24, that would be helpful.

[Unknown Executive]

[Interpreted] Yes. This is Eddie responding to your question on Siebert. In terms of financial impact, there may be some increase in broker fees that we may have to bear, but this impact is quite limited against Kakao Pay Securities' entire cost structure. And at this point, we're also talking to other brokers to quickly resolve this impact. And also, on a side note, we are also talking with Siebert as well in order to identify some areas of collaboration.

So our fee in 2023 was the lowest in terms of the overseas stock trading market, but we plan to partially normalize the level of the margin while we stuck to 5 basis points minimum in 2023 so that we could drive growth in terms of volume. In '24, with the upscaling of our MTS services, we will be normalizing by increasing the take rate to up to 7 basis points starting from February.

So 7 basis points would be the lowest rate in the market, say, for special time-limited promotions. We, therefore, expect to have price competitiveness. We will also provide timely benefits for investors such as through flash sales and by giving special negotiated fees.

Also, in 2024, we will focus on strengthening provision of investment information to facilitate overseas stock trading. In particular, we will further expand high-quality content for Kakao Pay Securities MTS and are working currently on a platform so that we could support active interaction between KakaoTalk users to share these good content. Also, through AI-powered stock bot to be released in Q1, people can casually engage in discussions in the chat rooms and then naturally extend into and be connected into MTS, which will feedback to increasing users trading in stocks.

On the other hand, we also plan to provide more upgraded day trading features which have been lacking compared to our competitors in the first quarter, and we will continue to strengthen the basics such as upgrading the order screen so that customers can use our services with more ease and with better convenience.

[Won-geun Shin, executive]

[Interpreted] This is Allen, the CEO. I will respond to your first question. Now, in year 2024, keyword for Kakao Pay is: number one, make the leap in payments; number 2, digital finance; and number 3, leap through personalization.

So first to talk about digital payment, our off-line payment coverage will increase dramatically as we embed multiple mobile payment methods, including Samsung Pay. On Android, Kakao Pay payment coverage will reach 100% and on iOS, most merchants will be able to accept payments with Kakao Pay across different locations, such as for restaurants and markets. In addition, we would dramatically strengthen Kakao Pay's market presence in all off-line segments by creating a clear advantage for users to pay with Kakao Pay as we provide them with benefits when people select Kakao Pay.

I believe that these improvements in usability is going to have positive riskable effect on online payment. We will expand Kakao Pay point ecosystem, such as including online strategic merchants like 11th Street, and also by expanding into long tail merchants through stronger partnerships with hosting companies, we would be able to strengthen the balance of online merchants through the collaborative Kakao Pay ecosystem.

Next is on digital finance. The implementation of the Financial Consumer Protection Act, which was enacted 3 years ago, affected many of our financial services that we wanted to attempt. But with the removal of major constraints this year, we expect to be able to generate better results in the financial business.

A good case in point is insurance. On January 19, the insurance comparison and recommendation service was rolled out. Starting with auto insurance, we expanded into pet insurance and medical indemnity for people to compare and choose on Kakao Pay platform. And we also look forward to major progress by Kakao Pay Insurance as well. Our overseas travelers insurance, which we launched last year, has shown triple-digit growth, and we've gained a leading position in the overseas travelers insurance market. And at the end of last year, we also launched our mobile phone insurance, as well as other new insurance products, including driver's license, which will contribute to revenue growth for digital finance.

Also for loan referrals, that business demonstrated a strong growth in Q4, and growth is continuing for the new lineup, including mortgages, Jeonse and Auto loan. This lineup was diversified with the addition of mortgages and Jeonse refinancing program which started in January 24, and we expect this business for continuous growth.

In investment, we plan to increase market share of domestic and overseas stock trading at Kakao Pay Securities and scale up stock collection features to drive top line retail investment and create synergies in regards to, for instance, the IPO shares between retail and wholesale business.

The last keyword is leap through personalization and tailoring services, I mentioned some example in my presentation like for teens under 18 years of age and outbound travelers, we would develop different services that is the best fit for individuals life stage or occasion supported by the foundation of MyData. As in the actual case where the service utilization rate under -- people under age 18 increased by more than 45% during a short period of 3 months. We will improve the utilization rate of Kakao Pay's financial services through the provision of personalized and tailored services.

[Operator]

[Interpreted] The last question will be presented by Sinyoung Park from Goldman Sachs Securities.

[Sinyoung Park, analyst]

[Interpreted] I have 2 questions I would like to ask. With the mortgage loans coming part of the rollover program, it seems like there has been an increase in the demand for that and I think that Kakao Pay also benefited from the application of the program to Jeonse rollover as well. Can you provide us with what your outlook is in terms of your strategic direction and TPV and take rates for that?

Second question is, it seems like the platform companies are providing more stronger user benefits. Any new benefits upcoming in 2024? And also, do you have any strategies that could help you further activate the use of your Pay app?

[Unknown Executive]

[Interpreted] Hello. This is Jason. Let me start with our direction and outlook. In '24, based on loan referral business and refinancing services for mortgage and Jeonse loans, which we launched early this year, we plan to complete product lineup and solidify the revenue-making product portfolio. In addition to the volume growth of our existing business, we expect new lineup of mortgage, rental, auto loans, as well as refinancing of credit, mortgage and Jeonse loan to drive up the volume from this diversified portfolio of loan products. With interest rate cuts expected in 2024, we can expect volume growth of credit loan referrals, as well as an upside in growing loan brokerage volume in line with the overall market backdrop, such as increase in credit lending by non-banking institutions. As such, in 2024, we expect our loan referral business to post around 25% to 35% growth on a year-over-year basis.

Now disclosure of the specific take rate from individual financial institution is bound by contract, so please understand that I cannot share details, but since mortgage rollover is offered mostly by the banking sector, average fee is lower versus the credit lending take rate.

But the absolute ticket size of mortgage is about 10x higher than credit loans. So the fee applied is by no means small. We plan to strengthen loan brokerage business utilizing MyData to cater to the needs of users in need of loans and provide the connection that they need. We will simplify the entire journey from comparison, discovery, enhancing usability through improving the quality of loan services.

And users, for instance, don't need to input information on housing owned to benefit from mortgage refinancing program. So with such better convenience, we will continue to explore areas to improve and scale up our service quality so that we can enhance overall user satisfaction. We are also keeping tabs on the market to capture additional upside and opportunities in new loan brokerage business.

[Interpreted] Hello. I'm Jeff, in charge of Services. Let me respond to your question. Now, Kakao Pay has been working to strengthen tangible financial benefits for users during year 2023. There were many promotion campaigns that we launched, including interest rate promotions on deposit, campaigns to expand overseas stock users, and campaigns to increase usage of Kakao Pay app. This year, in 2024, we will strengthen always on benefits for in-store payment. Kakao Pay will complete the integration of Samsung Pay in the first half of '24 and offer a new in-store payment reward program. The benefit will be configured with greater predictability and with better convenience will help expand our off-line payment.

Now, turning to the Pay app itself, from end of '22 to end of '23, Pay app MAU increased by more than 30% and WAU increased by more than 50%. And in '24, we will further scale up the Pay app. There are 2 main things we're considering to achieve that objective. First, we will enable ease of access and upgrade user benefits for in-store payment, offering compelling reasons to people to use the Pay app. To this end, we are making across-the-board revamping of the Pay app structure at this point and upgrading the payment window.

Secondly, we will recommend everyday services that users want. The strength of the Pay platform is that, user activity for payment and money transfer is much higher than compared to other financial applications, which can then be used to build up MyData track record, as well as spending data of active users, and -- which can then be further leveraged in recommending various Kakao Pay services which would then again work as a revenue stream. [Interpreted] Well, this brings us to the end of the fourth quarter '23 earnings presentation of Kakao Pay. Thank you very much for joining us this afternoon. If you have any unanswered questions, please feel free to contact us at the IR team. Thank you very much.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]