The Korea Fintech Industry Association said Tuesday that lawmakers must move forward with the critical Electronic Financial Transactions Act, which has been at an impasse at the National Assembly for several months, joining earlier calls from some politicians and the central bank in the wake of the Mergeplus fiasco.
The association, which represents 330 fintech companies, said that the Mergeplus incident was “predictable.” Without the revision of the EFTA -- which had not undergone any significant changes since its enactment in 2006 -- similar situations could happen in the future, they warned.
“The amendment to the EFTA needs to be quickly implemented as a safeguard in preparation for a number of possible situations brought about by the rapid spread of digital financial transactions,” the association, also known as Korfin, said in a statement.
Korfin’s statement comes as the fintech industry has grown restless over concerns that the Mergeplus scandal could muddy the waters for other fintech companies and damage their reputations.
“Just limiting the focus to tightening regulations to counter possible accidents is a short-sighted solution, which may not be enough to prevent a second or third Mergepoint situation,” the statement read.
Mergeplus launched Mergepoint, an electronic payment service, in 2018, attracting more than 1 million bargain seekers. Consumers can buy Mergepoints for 20 percent less than their face value, and use them in local retail franchises, convenience stores and coffee shops.
The demise of the company began earlier this month with the sudden halt in sales of Mergepoints and the decrease in the number of stores where customers could use their points. It came after the financial authorities issued warnings to the company, citing a lack of proper registration.
The association attributed the Mergepoint crisis to the lack of a relevant law on new online gift certificates.
Unlike prepaid electronic payment methods used for simple remittance services, which are regulated by the EFTA, there are no such regulations on online gift certificates. A previous law on gift cards was scrapped, resulting in a gray area for operators of online gift certificates, it said.
Proposed by the Financial Services Commission in July last year, the major overhaul of the 15-year-old law has come to a standstill partly due to several disagreements. The FSC and the Bank of Korea has been at loggerheads over the FSC’s growing grip on electronic payment services. Also, some argue that the revision disproportionately grants more leeway to fintech companies.
The association refuted claims that the revision to the EFTA is one-sided and in favor of fintech companies.
“It’s not about granting preferential treatment, but the revised law imposes strong responsibility and duties on fintech companies and e-finance businesses,” the Korfin added.
Last week, several politicians and the Bank of Korea pressed for the passage of the revised EFTA so as to reinforce customer protection.
By Park Ga-young (email@example.com