For the first time since the T-MEP debacle in July last year—when Tmon and WEMAKEPRICE INC. failed to pay funds owed to sellers—the financial authorities canceled the registrations of two payment gateway (PG) companies. Since the related law took effect in 2007, only five PG firms had previously received registration cancellations, a result of the financial authorities tightening oversight of PG operators in the wake of the T-MEP incident.
According to the financial authorities on the 28th, the Financial Services Commission (FSC) recently canceled the electronic financial business registrations of PG firms NSPayments and 13Mile. PG companies provide services that relay payment information and broker settlement of funds among buyers, sellers, and financial institutions for online and offline payments.
NSPayments and 13Mile were said to have failed to comply with the Electronic Financial Transactions Act, including by not submitting business reports to the Financial Supervisory Service (FSS). 13Mile operated an integrated payment terminal called "NextM" and received investment from Kakao Pay in 2018. NSPayments is known to be connected to a PG company identified as L that is on trial over delayed repayments totaling about 78 billion won.
It is the first time in three years since September 2022 that the financial authorities have decided to cancel a PG firm's registration. Since electronic financial business registration began in 2007, only five firms had previously been canceled. Under current law, the FSC can cancel an electronic financial business registration, but the requirements are strict, such as registering falsely or receiving at least a fine for violating financial laws and regulations.
In July last year, the large-scale non-settlement crisis at T-MEP sparked criticism that PG firms were operating in a blind spot of oversight. Financial companies can operate only after going through the financial authorities' licensing process, but PG firms can do business with simple registration.
The financial authorities check and evaluate PG firms' soundness and management conditions every year, but the measures they can actually take are basic, such as requesting management improvements, submitting and evaluating plans, and concluding management improvement agreements. In response, the National Assembly and the financial authorities strengthened supervision of PG firms through legal revisions and system improvements.
An amendment to the Electronic Financial Transactions Act that provides a basis for step-by-step measures—such as corrective requests, business suspension, and registration cancellation—when electronic financial business operators, including PG operators, do not comply with management guidance standards was promulgated on the 16th of this month. The amendment will take effect on Dec. 17 next year.