The file photo, taken July 25, 2024, shows a large number of consumers calling for refunds at the headquarters of WeMakePrice, a South Korean affiliate of Singapore-based e-commerce platform Qoo10 Group, amid massive payment delays by the platform and its sister platform TMON. (Yonhap)
SEOUL, Sept. 9 (Korea Bizwire) – The financial regulator on Monday announced plans to revise related laws to require payment gateway (PG) service providers to maintain sufficient funds to settle all payments.
The move follows massive payment delays by two e-commerce platforms — TMON and WeMakePrice — due to a liquidity crisis caused by their Singapore-based parent firm, Qoo10, engaging in “aggressive merger deals.”
It comes as part of a plan to reform the e-commerce industry, discussed and finalized at a government-ruling party meeting earlier in the day.
The proposed revision, if legislated, would “impose a duty on PG firms to maintain the entire amount (100 percent) of unsettled payments to enhance the safety of payment systems,” the Financial Services Commission (FSC) said.
The PG firms will also be required to notify their consumers where and how they maintain and manage such funds.
They, however, will be required to keep 60 percent of unsettled payments in safe accounts in the first year following the enactment of the envisioned regulation, 80 percent the following year and 100 percent after that, according to the FSC.
Damaged customers and vendors hold a protest in front of the Financial Supervisory Service building in Seoul demanding quick refunds and payments by the e-commerce platforms of TMON and WeMakePrice on Aug. 6, 2024. (Image courtesy of Yonhap)
Also, the entire amount of funds reserved for payment settlements will be protected from any transfer to or seizure by a third party, while using them as collateral for a loan will also be prohibited. In addition, those with unsettled payments will have priority to the reserved funds, it added.
The Financial Supervisory Service said earlier that the two online shopping platforms had failed to pay 48,124 vendors, totaling 1.28 trillion won (US$955 million) in unsettled payments as of Aug. 25.
The envisioned revision will also stipulate regulations for PG service providers, enabling the currently lacking oversight by financial authorities.
Such regulations, if enacted, would allow the financial authorities to take necessary steps in case of illegal activities ranging from request for corrections and suspension of their business operations to revocation of registrations, according to the FSC.
(Yonhap)
