FSC Korea to Overhaul Digital Finance Regulations – Report

Source: Regulation Asia Editors, Regulation Asia 2020-07-28

Mobile payment service providers will be allowed to offer deferred payment services, issue payment accounts to users, and enable larger transaction limits.

Korea’s FSC (Financial Services Commission) has reportedly announced a plan to overhaul digital finance regulations, representing the first major change to the regulations since 2006.

Under the plan, mobile payment service providers such as Toss, Naver Pay and Kakao Pay will be allowed to offer deferred payment services, like credit card companies, whereby users need not transfer money to the platforms ahead of making purchases. Instead, they can settle their outstanding balances afterwards, though the payment platforms will not be able to charge interest for the service. Deferred payments will be allowed up to KRW 300,000 (USD 250) at once.

The FSC will also increase the limit on how much can be charged to a mobile payment platform, from KRW 2 million to KRW 5 million, to enable larger transactions such as on travel products and electronics goods. However, daily transactions through mobile payment platforms will be capped at KRW 10 million.

The capital requirements for mobile payments platform operators will also be adjusted, to encourage new entrants to the sector. Currently, the capital requirement ranges from KRW 500 million to KRW 5 billion, depending on the type of business. This will be lowered to between KRW 300 million and KRW 2 billion.

The regulator is also looking to authorise fintech companies to issue payment accounts to users, similar to practices allowed in the EU and Singapore. Under the plan, companies like Naver Financial or Kakao Pay will be allowed to issue payment accounts to users, allowing them to make payments on bills. However, they are will not be allowed to save deposits or issue loans. The capital required for this authorisation will be KRW 20 billion.

The new regulations will be proposed to the National Assembly by September.

FSC

FSC Korea to Overhaul Digital Finance Regulations – Report

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