SEOUL, Jun. 20 (Korea Bizwire) — South Korean banks will fully open their payment system to fintech firms in December, officials said Thursday, in a move that could encourage the development of new payment services and greater competition in the financial sector.
Currently, the financial payment network in South Korea has a closed system accessible only by banks. And a bank is only allowed to process transactions for its own accounts.
The Financial Services Commission (FSC) said it will encourage banks to open their payment system to fintech firms on a trial basis from October. After two months of trial operations, the system will be fully opened to fintech firms.
If banks fully open their payment system, customers will be allowed to use a single application to access their accounts at different banks and make payments, the FSC said.
“Fees charged to fintech firms for using the network will be lowered to one tenth of the current level to ensure fair competition,” the FSC said in a statement.
Kwon Dae-young, director-general of the Financial Innovation Bureau at the FSC, said the current regulatory framework, therefore, will be overhauled to embrace more flexibility and scalability in response to the emergence of diverse financial payment services.
South Korea’s financial authorities have pledged to promote the fintech industry since the National Assembly passed bills last September on a “regulatory sandbox,” in which fintech firms are allowed to experiment under amicable regulations.
The government is also counting on fintech to reinvigorate its financial industry, which has been struggling with slow growth and thin margins.