Amid growing concerns over the security of online payment services, Viva Republica, operator of online bank Toss, said Monday that it would fully compensate its customers who fall victim to any type of financial fraud.
The move came after unauthorized payments worth 9.4 million won ($7,860) were made on the financial technology platform in early June, raising questions over the safety of the mobile payment system.
“Transactions via Toss should be considered safer than face-to-face banking and financial services,” said Lee Seung-gun, CEO of Viva Republica. “The latest compensation measure is in line with the company’s principals to be responsible in running services and put priority on customers.”
Toss users who have suffered financial damage from unauthorized payments, money transfers and withdrawals, as well as voice phishing can receive compensation from the company. Fraud cases, however, should be reported within 30 days of the incident.
So far there has been little possibility for victims of unauthorized transactions to be compensated for their financial losses unless someone who has illegally obtained personal information for the fraud is caught. The latest policy will also help victims of voice phishing to receive compensation even before authorities’ investigations of the phone fraud cases are completed.
Since the fraud incident in June, the Seoul-based fintech unicorn has been beefing up its security system, utilizing machine learning technology to detect fraudulent transactions.
The unauthorized payments on Toss have caused ripples across the local fintech industry, which has been gathering momentum thanks to an increasing preference toward non-face-to-face financial services during the recent coronavirus crisis.
Mobile payment services operator Kakao Pay is reportedly planning to adopt a new rule to compensate fraud victims on its platform as well. On the Kakao Pay platform, victims of financial fraud cases are expected to receive compensation even before financial authorities and police wrap up their probe.
“Kakao Pay is considering to deploy a new measure to protect its users from unauthorized payments and make its platform safer,” said an official from the payment services firm, which is backed by mobile messenger firm Kakao.
The new compensation measures prepared by the fintech firms are thought to be linked to the government’s plan to strengthen compensation rules to help fraud victims and implement stricter measures against companies that lack security systems to protect customers.
By Kim Young-won (firstname.lastname@example.org