Diagnosis and Suggestions for the Public Delivery App `Ddanggyeo-yo`

1. Introduction: The Emergence of the Public Delivery App Ttaenggyeoyo and the Need for Assessment

Korea’s food delivery app market is effectively dominated by two major players—Baemin (Baedal Minjok; hereinafter “Baemin”) and Coupang Eats (hereinafter “Coupang”). Among late entrants, however, one platform showing meaningful traction is Ttaenggyeoyo, a public–private partnership (PPP) delivery app launched by Shinhan Bank in January 2022. Targeting merchants, Ttaenggyeoyo has entered the market with strong price competitiveness and robust local-government backing, offering a low intermediation commission of 2% and no advertising fees, in cooperation with the Seoul Metropolitan Government. In April, Seoul also signed an agreement with 18 chicken franchise brands to introduce the “Seoul Delivery+ Price System.” Membership on Ttaenggyeoyo has grown from 1.65 million in 2022 to 5 million as of May 2025, rising steeply by roughly over one million users per year.

Meanwhile, on April 18, the Ministry of Agriculture, Food and Rural Affairs announced a KRW 65 billion support program for public delivery apps, indicating a broader trend toward stronger government involvement and support in the delivery-app market. The new administration previously proposed a “cap on delivery-app commissions” as an election pledge, and it is widely expected to continue public delivery-app support programs going forward. Against this backdrop, this issue report examines (i) current conditions in the delivery-app market, (ii) government and local-government policy and fiscal support for Ttaenggyeoyo, and (iii) an overall diagnosis and policy recommendations regarding expanding public intervention in the delivery-app market.

2. Overview and Analysis of the Delivery-App Market
◩ Introduction to delivery apps (online food-order intermediation platforms) and the fee structure

Korea’s online food-order intermediation platforms—commonly referred to as “delivery apps”—can be divided into private-sector delivery apps and public delivery apps operated by local governments. Major private delivery apps include Baemin (Woowa Brothers), Coupang Eats (Coupang), and Yogiyo (Widaehan Sangsang). Public delivery apps include Ttaenggyeoyo (Seoul), DongbaekTong (Busan), Baedal Teukgeup (Gyeonggi), and Baedal-ui Myeongsu (Gunsan).

The revenue structure of food-delivery platforms generally works as follows: the platform charges consumers the order price plus a delivery fee, and then pays delivery workers the delivery fee minus certain commissions (Choi Yoon-jung, 2024). Delivery fees are broadly composed of (i) a “delivery charge” paid by restaurant operators and (ii) a “delivery tip” (delivery service fee) paid by consumers, and can vary depending on order value, time of day, and distance. From the perspective of delivery-agency service providers, delivery fees consist of a base delivery fee, promotional costs (e.g., marketing), and platform commissions.

◩ Trends in delivery-app users: 34.53 million (2022) → 39.96 million (2025) (increase of 5.4 million)

The number of delivery-app users decreased from 34.53 million in 2022 to 30.81 million in 2023, rebounded to 34.34 million in 2024, and then rose sharply again to roughly 40 million in 2025. This corresponds to about 77.3% of Korea’s total population (51.68 million), suggesting that a large majority of the public uses delivery apps. This trend appears to reflect a market recovery and renewed growth after 2023, as consumers’ positive experiences and satisfaction with delivery services supported demand following the post-pandemic slowdown.

By platform, the largest user base is held by Baemin (private) at 22.38 million, followed by Coupang (private) at 11.01 million and Yogiyo (private) at 5.04 million. Ttaenggyeoyo (public) stands at 1.53 million users, but the figure is gradually increasing.

◩ Growth in the food delivery market: KRW 17.3 trillion (2020) → KRW 37 trillion (2025) (2.14× increase)

Estimating the size of Korea’s food delivery market using Statistics Korea’s online food service transaction value, the market expanded from KRW 17.3 trillion in 2020 to KRW 37 trillion in 2025—an approximately 2.14-fold increase over five years. While the number of delivery-app users fell substantially in 2023 before rising again, the overall market size (transaction value) has continued to grow even after the surge driven by COVID-19.

3. Status of the Public Delivery App Ttaenggyeoyo and Policy/Fiscal Support by the Government and Local Authorities
◩ Concept and features of Seoul–Shinhan Bank’s PPP public delivery service

Seoul has been operating “Seoul Delivery+ Ttaenggyeoyo” in partnership with Shinhan Bank based on the view that active public intervention is needed to reduce the burden on small business owners caused by commission hikes on delivery platforms (Seoul Metropolitan Government website, “Seoul Public Delivery Service”). For small merchants, the model improves business conditions by setting an intermediation commission of 2% and a flat delivery charge of KRW 3,300. For consumers, it expands platform choice and can reduce household burdens—for example, by saving on delivery costs when using the Seoul Love Gift Certificate.

Compared with private platforms, using Ttaenggyeoyo can reduce merchants’ burdens by roughly KRW 1,000 for a KRW 15,000 order and by about KRW 1,700 for a KRW 25,000 order—i.e., a reduction of over 20% in some cases.

For Shinhan Bank, the business can be commercially attractive in that it can maintain a “public delivery app” platform with stable backing, even with low commission revenue, while also benefiting from ESG-related branding and without needing to spend heavily on separate marketing due to support from Seoul and district offices.

◩ Policy and fiscal support from Seoul and district governments for Ttaenggyeoyo

Seoul’s 2025 budget for Ttaenggyeoyo-related programs includes:

KRW 1 billion for supporting small merchants’ online sales channels (activation of Seoul’s public delivery service);

KRW 30 million in national subsidies (promotion of Seoul’s public delivery service); and

KRW 60 million for an “enhancing competitiveness package” for the restaurant industry (promotion of Seoul’s public delivery service),
for a total of KRW 1.09 billion.

Related Seoul policies include support for activating public delivery apps under the “Himbo-taem Project” (aiming for commissions in the 1–2% range) and diversification of online channels for small merchants in response to online-centered consumption trends. In addition, the “People’s Livelihood Recovery Consumption Coupon (Ttaenggyeoyo)” program provides benefits such as:

an upfront discount of 5–15% on “Seoul Love Gift Certificate + Ttaenggyeoyo gift certificates”;

a new-member coupon pack (KRW 16,000); and

public delivery-app activation coupons (KRW 10,000).

At the district level, Yeongdeungpo-gu, Gwanak-gu, and Gangnam-gu have been selected as pilot districts for public delivery-service activation. District-level benefits include a 10% payback gift certificate (paid on the 20th of the following month) and 5% Ttaenggyeoyo points (credited after ordering). In terms of district budgets for 2025, Yeongdeungpo-gu allocated KRW 79.825 million to operate the public delivery app (Ttaenggyeoyo), while Guro-gu allocated KRW 187.98 million for issuing “Guro Ttaenggyeoyo gift certificates.”

Additionally, on July 21, the Seoul Credit Guarantee Foundation (hereinafter “Seoul CGF”) and Shinhan Bank signed a mutual-growth agreement: Shinhan Bank will make a KRW 1.6 billion special contribution to Seoul CGF, and Seoul CGF will establish a KRW 20 billion special guarantee fund titled the “Seoul Delivery Mutual-Growth Fund.” Under this program, eligible small merchants receive preferential terms such as (i) an interest subsidy of 2.0 percentage points per year, (ii) a higher guarantee coverage ratio, and (iii) a reduction in guarantee fees by up to 0.2 percentage points (Seoul CGF website; Yonhap News, July 21, 2025).

◩ Central government policies and fiscal support: a commission cap and the Ministry’s public delivery-app activation program

First, as an election pledge, the new administration explicitly stated under the section “3. [Economy & Industry] Boosting Household and Small Business Vitality and Realizing a Fair Economy” that it would “build a fair delivery culture by prohibiting discrimination in platform intermediation commission rates and introducing a commission cap” (National Election Commission policy/pledge portal). The National Assembly’s National Policy Committee is currently discussing whether to include a delivery-app commission cap in the Online Platform Act. A delivery-app commission cap is a form of regulation and active intervention that limits the “total fee”—including intermediation and payment commissions and delivery-related fees—charged to restaurant owners so that it does not exceed a certain percentage of the order amount.

In addition, the Ministry of Agriculture, Food and Rural Affairs (hereinafter “MAFRA”) announced that it would launch a consumption-coupon program starting June 10 to activate public delivery apps (local-government apps and PPP models) (MAFRA press release, June 9, 2025). Under this program, consumers who place three takeout or delivery orders of at least KRW 20,000 each via a public delivery app receive, on a first-come-first-served basis, a KRW 10,000 consumption coupon usable for a subsequent order, with 6.5 million coupons to be distributed. The central government budget for the program newly allocated KRW 65 billion through the first supplementary budget. The program covers 12 public delivery apps: eight developed by local governments (Baedal Teukgeup, Daegu-ro, Baedal Moa, Jeonju Mat Baedal, Baedal-ui Myeongsu, Baedal-eum, Ulsan Pedal, Baedal Yangsan) and four PPP models (Ttaenggyeoyo, Meokggae-bi, Wemakeprice O, and Hwiparam), all of which are expected to participate.

4. Diagnosis and Analysis of Public Intervention: Ttaenggyeoyo and the Commission Cap Proposal
◩ Insufficient grounds for public intervention and fiscal support in the delivery-app market

Public delivery apps emerged from the perception that a small number of large platforms impose high commissions and thereby burden small merchants. However, this is less a case of “market failure” than a normal outcome of competition and voluntary transactions. As complaints about high commissions have intensified, private platforms have already been adapting and innovating—through changes such as expanding consumer options, including direct delivery by restaurants. If the public sector intervenes directly in the delivery-app market with a single policy goal—reducing small merchants’ commission burdens—it risks obstructing the legitimate business activities of private platforms competing in the market.

Platform markets are characterized by continuous competition and innovation, and therefore require cautious public involvement. Competition among private platforms persists across multiple dimensions, including commissions, service quality, and onboarding methods, and a range of smaller platforms and direct-transaction apps are also being developed. Rather than directly operating and subsidizing platforms, government should limit its role to fostering fair competitive conditions and ensuring transparency and consumer choice. This is the most effective approach to protecting small merchants while preserving market function.

◩ Continued fiscal injections and intervention risk inefficiency and waste: the public sector cannot match private innovation

Public delivery apps often rely on public budgets to cover marketing, operations, and system development, making them prone to structural inefficiency relative to private-sector models. In practice, Ttaenggyeoyo has been increasing its user base amid active policy and fiscal support from Seoul and the central government, yet it still shows relatively low brand awareness and market share. Low delivery prices alone do not constitute competitiveness.

Ttaenggyeoyo has attracted merchants by emphasizing low commissions (0–2%), but this is essentially a distorted price signal created by fiscal support—similar to a subsidy. Commissions are legitimate compensation for maintaining the platform, payment systems, and customer acquisition. Artificially suppressing commissions creates fairness concerns vis-à-vis private competitors and undermines long-term service sustainability.

Private firms reinvest profits to upgrade services, whereas public platforms are often run according to political narratives rather than profit-and-loss discipline, making them structurally disadvantaged in sustainability and development potential. Public delivery apps also tend to lag behind private competitors in critical areas such as the number of participating merchants, UX/UI, app stability, the absence of proprietary delivery systems, and operational linkages for securing delivery riders. Private platforms naturally improve quality through user ratings, reviews, and competitive pressure; public apps have weaker mechanisms for such improvement. Consequently, even if the public sector injects additional funds to raise market share, it is unlikely to keep pace with private innovation—risking inefficiency and waste.

◩ Risk of undermining private innovation and competition

The delivery-app market has advanced rapidly through technological development, data-driven recommendations, logistics optimization, and advertising and discount strategies. If the public sector enters the market based primarily on price, it may reduce private-sector incentives to invest and, over time, significantly weaken the innovation ecosystem of delivery platforms.

◩ Problems with a commission cap: infringement on market autonomy and potential decline in service quality

Although framed as protecting small merchants, introducing a delivery-app commission cap is a direct intervention and regulation that can undermine market autonomy and reduce service quality. Platform fees are not merely “intermediation costs”; they represent legitimate compensation for bundled services, including marketing/advertising and promotion, payment infrastructure, data analytics, merchant–consumer matching, and rider connectivity. If such fees are artificially capped, costs may be shifted elsewhere—through reduced rider incentives, passing advertising costs onto merchants, restricting merchant onboarding, or other mechanisms—ultimately harming merchants, consumers, and delivery workers alike. Reduced platform revenue can also negatively affect new services and investment.

International experience also suggests risks. During the COVID-19 outbreak in 2020, 78 jurisdictions in the United States introduced commission caps, and New York and New Jersey limited caps to around 10–15%. However, cities such as Chicago, Denver, and San Francisco later repealed or eased the policy due to “balloon effects”: platforms passed costs on to consumers, delivery fees increased, and order volumes fell sharply.

5. Conclusion: Recommendations Regarding Public Policy and Intervention in the Delivery-App Market
◩ Reconsider government/Seoul support and intervention: public platforms can be more expensive than private ones once budgets are included

Ttaenggyeoyo was launched as a public service under the banner of protecting small merchants, but in practice it faces structural limitations—distorting competitive order in the private market and relying on tax-funded operations. While low commissions and subsidized benefits may provide short-term advantages for some small merchants, in the long run they can weaken private platforms’ incentives for innovation and ultimately harm both consumers and suppliers. Once public budgets are included, supporting and maintaining public delivery apps such as Ttaenggyeoyo can become far more costly than relying on private delivery apps. For these reasons, government-led provision of public delivery services and direct intervention in the delivery-app market should be reconsidered. Alternatives that support small merchants without undermining market dynamism include improving transparency in platform fees, enhancing fairness in onboarding conditions, and lowering barriers to entry for smaller platforms. The public sector’s role is to create an environment where platforms can become more diverse and compete more vigorously. Expanding public platforms without ensuring sustainability and innovation is, in itself, likely to generate further inefficiency.

◩ The National Assembly should reconsider the commission cap proposal

A delivery-app commission cap may appear to be a well-intentioned intervention, but it carries the risk of undermining market autonomy and weakening private innovation incentives. Although the cap is framed as reducing small merchants’ burdens, it can distort platforms’ revenue structures and shift costs through other channels. While commissions may decline in the short run, longer-term side effects—such as lower service quality, reduced supply, and higher delivery fees for consumers—may be greater. Ultimately, legislative discussions on introducing a commission cap should be reconsidered or withdrawn.

Korean version: https://www.cfe.org/20250728_27927