The Bank of Korea warned that the settlement crisis that occurred in July last year at TMON and WEMAKEPRICE (hereafter referred to as TIMEP) could also occur in other industries such as delivery services and accommodation booking services. The bank noted that it would strengthen monitoring of electronic payment processing companies.
The Bank of Korea disclosed this through the 'Payment Settlement Report' published on the 21st. The Payment Settlement Report is an annual report that contains payment trends by payment settlement system, the Bank of Korea's policy responses, and details of monitoring activities.
The TIMEP crisis arose in July of last year when TMON and WEMAKEPRICE failed to pay settlement fees to sellers. The two companies changed their settlement cycles in October 2023, when financial conditions deteriorated, to '40 days after the end of the month' and '2 months + 7 days after the end of the month,' respectively, delaying payments, but, within just 9 months, they even failed to uphold this.
Initially, TIMEP delayed payments citing reasons such as computer errors but ultimately declared that it would indefinitely postpone settlements. Consequently, first-rate payment processing companies and simple payment companies temporarily suspended their transaction relationships with TIMEP, and unable to operate normally, TIMEP applied for corporate rehabilitation and voluntary restructuring at the Seoul Bankruptcy Court. In this process, a total of 48,000 corporations were unable to receive payments amounting to a total of 1.3 trillion won.
By industry, the scale of damage was largest in the digital and electronics sector, accounting for 29.0% of the total, followed by gift certificates (25.2%) and food (10.0%). In particular, the digital and electronics sector was analyzed as having been concentrated in sales with gift certificates, as it had ▲ a large sales volume per unit sold, ▲ secured many sellers with good performance, and ▲ found it easier to obtain advance loans compared to other product groups.
The Bank of Korea evaluated that while this incident did not have a direct impact on the payment settlement system, the damage spread as first-rate payment processing companies, card companies, and simple payment companies suffered losses in the process of payment cancellations and refunds to consumers.
The Bank of Korea warned that, with the recent rise of big tech and the acceleration of digital transformation, the blurring of boundaries between industries is rapidly progressing, and the TIMEP crisis could spread to other sectors.
The Bank of Korea pointed out that 'the long-term locking of funds internally by TIMEP through an extended settlement cycle can be seen as a kind of funding behavior (interest-free borrowing), and similar problems could arise in other sectors such as delivery services and accommodation booking services.'
It added, 'There is a need to continuously check the possibility of misappropriation of customer funds and payment capabilities,' and noted, 'The Bank of Korea will also strengthen monitoring by utilizing its authority to request data from electronic financial companies and payment processing companies that issue prepaid electronic payment means.'