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)
SEOUL, Aug. 7 (Korea Bizwire) — The government will push to shorten the period of payment settlement for e-commerce platforms to their vendors and require that companies separately manage funds needed for payments in an effort to prevent a recurrence of the crisis involving Qoo10-owned marketplaces, the finance ministry said Wednesday.
They are part of follow-up measures by the government to respond to payment delays by TMON and WeMakePrice, which also called for an additional 600 billion won (US$435.57 million) of financial support for local vendors suffering damage, according to the ministry.
The two e-commerce platforms filed for corporate rehabilitation in the Seoul Bankruptcy Court late last month after failing to make payments to their vendors and provide refunds to customers amid liquidity issues due to their owners’ aggressive merger deals.
The financial authorities suspect there are more than 1 billion won of unpaid bills and other liquidity issues regarding the incident.
According to the plan, the government will push to revise the act on fair transactions by large retail businesses and adjust the upper limit of e-commerce platforms’ settlement period to vendors to about 40 days.
Currently, the period is set at up to 60 days.
Vendors have said that more than two months of revenue are tied up due to the practice of settling payments months afterward, and such a payment system and improper regulations have been blamed for the incident.
The government decided to require e-commerce platforms and payment gateways to set aside a certain proportion of the money to be paid to sellers so as to prevent them from diverting the money for other purposes.
Finance Minister Choi Sang-mok speaks during a meeting of ministers connected to the economy in Seoul on Aug. 7, 2024. (Image courtesy of Yonhap)
It will also devise measures to step up oversight into payment gateways.
Details about new regulations will be fixed later after consultations with industry officials and experts, the ministry said.
In the wake of the incident, the financial authorities have vowed to provide low-interest loans and extend repayments of existing loans and on tax payments worth at least 560 billion won combined.
In addition, local governments will extend 600 billion won in emergency management stabilization funds for local vendors suffering from financial damage.
Some 60 billion won will also be available for travel agencies hit particularly hard by the payment delays.
The government will begin procedures for the settlement of collective disputes for victims next week and to support them in their possible civil suits against the marketplaces.
It will extend support to wrap up refunds this week for those who bought goods other than travel packages and gift cards.
The government also vowed to boost cooperation with credit card firms, travel agencies and other relevant entities to help buyers of travel packages, gift cards and other services give their money back at an early date.
“The government will extend extra support for victims of the WeMakePrice and TMON incident and seek measures to prevent additional damage,” Finance Minister Choi Sang-mok said during an economy-related ministers’ meeting in Seoul on Wednesday.
“We will fix details of law revisions to be submitted to the National Assembly within this month,” he added.
Qoo10 was founded in 2010 and acquired TMON in 2022 and WeMakePrice last year.
(Yonhap)
