Kakao Pay is expected to halt its integrated personal data management services after failing to obtain a license from the financial authorities, the company said Thursday. The move could leave the firm lagging behind rivals, which are aggressively tapping into the business area.
The fintech arm of mobile giant Kakao said its asset management service, which allows users to keep track of all their bank accounts, credit card records and insurance policies, will cease Feb. 5. Other companies that were granted approval will commence offering personal data integration services, called MyData, on that date. The termination of services will affect some 15 million of the 35 million users registered with Kakao Pay.
“The asset check service gives an overview of users’ assets, and because it is the main page you see when you access Kakao Pay service, from which all other services and products are linked, a negative impact on business is highly likely,” a Kakao Pay official said Thursday.
A user scans a QR code to make a mobile payment on the Kakao Pay app. (Kakao Pay)
A MyData license is essential for companies looking to compete in the fast-growing data-driven financial market, as it allows companies to make personalized product recommendations to customers based on individual credit information.
On Wednesday, the Financial Services Commission announced that 28 companies -- including Naver Financial and Viva Republica -- were granted approval to do business involving MyData. But Kakao Pay and KEB Hana Bank failed to receive licenses due to issues concerning their major shareholders.
The FSC, which has a strict screening process for major shareholders of financial companies, said it was unable to determine whether China’s Ant Group, the second-largest shareholder of Kakao Pay with a 43.9 percent stake, had ever been subject to sanctions by the Chinese financial authorities. Sanctions by financial authorities, investigations by the prosecution and criminal convictions can disqualify major shareholders.
Naver Financial faced an issue involving one of its largest shareholders, Mirae Asset Daewoo, during preliminary screening last year. Mirae Asset Daewoo was accused of violating the Foreign Exchange Transactions Act and prosecutors were investigating. To secure MyData business approval for Naver Financial, Mirae Asset Daewoo promised to lower its stake in the company to 9.5 percent -- below the 10 percent threshold to be considered a major shareholder -- by changing regular 109,500 won shares into convertible preferred stocks. Previously, it held a 17.66 percent stake.