A claim has emerged that Toss (Viva Republica) engaged in illegal business practices while installing its payment terminals in stores. Under current law, it is prohibited to provide payment terminals free of charge to stores with annual sales exceeding 300 million won, and the allegation is that Toss violated this. Industry observers say Toss is accepting losses based on its strong capital to boost market share.
According to a compilation of ChosunBiz reporting on the 26th, Toss Place, Toss's subsidiary in the institutional sector for offline payments, has provided payment terminals free of charge to at least 20 large stores from last year to the present.
◇ "Toss engages in illegal sales while swallowing hundreds of billions of won in losses"
The credit card payment structure is broadly divided into customer→store→value-added network (VAN) company→credit card company. VAN companies supply payment terminals to stores through agencies. Agencies distribute terminals to stores and collect device usage fees, installation fees, maintenance fees, and payment fees. The device usage fee is around 30,000 to 50,000 won per month.
As a latecomer to the payments market, Toss conducted sales by saying, "We won't charge device usage fees, so please use Toss payment terminals." Under Article 18-3 (Prohibition of Unfair Compensation, etc.) of the Act on Specialized Credit Finance Business, providing payment terminals free of charge to large stores with annual sales exceeding 300 million won is defined as "unfair compensation (rebates)." Violations are punishable by up to five years in prison or a fine of up to 30 million won.
Since last year, one VAN company has lost more than 20 large stores managed by its affiliated agencies to Toss. A VAN company official said, "We heard they were planning to switch because Toss would let them use the terminals for free."
An official at the Financial Supervisory Service said, "Rebate activity at large stores is clearly subject to criminal punishment," adding, "If a report is filed with the Financial Supervisory Service, we confirm the allegations through an internal review and request a police investigation."
In response, a Toss official said, "Selling and managing Toss payment terminals in stores is the agencies' sales strategy, not Toss's, so Toss Place cannot be involved." To enter the payment terminal market, Toss Place acquired iShopCare, a VAN agency, in 2022 and made it a subsidiary.
◇ Toss accepts operating losses… luring agencies with hefty incentives
To quickly increase market share, Toss paid agencies "sales incentives" ranging from as little as 9 million won to as much as 60 million won. Contracts Toss signed while supplying terminals to agencies also contain clauses unfavorable to the agencies.
According to a contract obtained by ChosunBiz, Toss listed as grounds for termination "when an agency handles payment terminals from companies other than Toss" and "when the agency fails to meet the 'minimum device installation target' that Toss renews every six months." If a contract is terminated for such reasons, there was also a clause requiring the agency to return double the sales incentives within five years.
Agencies say they are effectively forced to accept Toss's terminals. An agency official said, "Sometimes a customer store asks, 'Toss doesn't charge device usage fees, so what are you going to do?' If we lose the store to Toss, we can't collect device usage fees, maintenance fees, or payment fees, so the best we can do is supply Toss terminals and at least collect the rest minus the device usage fee."
Another official said, "If Toss gives up immediate revenue and does business while accepting losses, there's no way to compete. Large VAN companies with annual sales in the hundreds of billions of won can respond, but others have no choice but to use Toss's terminals." Toss Place posted net losses of 21.9 billion won in 2023 and 53.6 billion won in 2024.
A Toss official said, "Contracts with agencies were concluded within legal boundaries. We are not currently operating contracts that require handling only Toss terminals."