The Financial Supervisory Service (FSS) decided to expand inspections of electronic financial service providers this year. The FSS only announced that it would conduct a regular inspection of Naver Pay but is also planning ad-hoc inspections on other companies. To prevent a recurrence of the 'Timaf' incident that occurred last year, the FSS plans to thoroughly examine the management status of prepayment deposits and sales proceeds of electronic financial service providers.
According to financial authorities on the 24th, the FSS is in the process of establishing a plan for ad-hoc inspections and checks of electronic financial service providers this year. Previously, the FSS announced its inspection plan for this year, which only included one regular inspection of electronic financial service providers. Potential candidates for the FSS's ad-hoc inspections include retail platforms and simplified payment services, such as Coupang Pay and Baedal Minjok (Woowa Brothers). Major electronic payment gateway companies like NHN KCP and KGINICIS are also likely candidates for inspection.
An FSS official noted, 'We have inspection authority over retail platform electronic financial service providers and payment gateway companies.' The official added, 'We are currently in a stage of considering the targets and topics for ad-hoc inspections. If urgent issues arise, we will conduct on-site inspections, and even if there are no urgent issues, we are reviewing various options, including informal checks.'
The reason these companies are mentioned as inspection targets is that they align with the goals and direction of this year's inspections by the FSS. At the end of last year, the FSS restructured its organization to establish a new division for digital and information technology (IT), along with the electronic financial inspection and oversight bureau. The reason the FSS formed a dedicated organization for electronic financial service providers is to prevent financial accidents like last year's large-scale settlement delay incident involving Timaf. Timon and WeMakePrice operated retail platforms while also managing payment gateway services, but they fell into an unsustainable situation after misappropriating sales proceeds that should have been paid to their partner companies. The two companies failed to pay up to 1.3 trillion won in sales proceeds and Timon has not been able to return prepayment deposits amounting to several hundred million won to consumers.
Accordingly, the FSS has focused this year's inspections on checking the management status of prepayment deposits and settlement proceeds. Both Coupang Pay and Baedal Minjok provide prepayment deposit services. Electronic financial service providers must manage the full amount of prepayment deposits separately through trust or payment guarantee insurance according to the Electronic Financial Transaction Act. The FSS will assess compliance with this law. The management of sales proceeds is the primary inspection target for payment gateway specialists. Currently, the legal obligation for payment gateway companies to manage sales proceeds separately is not specified. However, according to the amendment to the law being promoted by the government, the FSS plans to use the separate management of 100% of sales proceeds as a criterion for inspections. The government is in the process of promoting an amendment to the law that imposes the obligation of separate management of all sales proceeds for payment gateway companies.
Even electronic financial service providers with excellent financial conditions can be included in the FSS's inspection radar. An FSS official remarked, 'We will not skip inspections just because a company's financial condition is good,' adding, 'In this year's inspections, we will focus on how well companies manage their settlement proceeds in accordance with regulations, even if their financial condition is good.'