[Column] Bank of Korea and Financial Services Commission Clash Over Payment Systems Turf

[Asia Economy Reporter Jo Gang-wook] An amendment to the Electronic Financial Transactions Act, which sparked conflict between the Bank of Korea and the Financial Services Commission over the authority to supervise payment and settlement services of big tech companies such as Naver Pay and Kakao Pay, has been proposed. Due to strong opposition from the Bank of Korea, a clause was included to prevent the Financial Services Commission from intervening in the operations of the Korea Financial Telecommunications and Clearings Institute (KFTC). Although the Financial Services Commission appears to have stepped back, the Bank of Korea has expressed dissatisfaction that the overall framework, which grants the Financial Services Commission the authority for total management and supervision of the payment and settlement system, remains intact, leaving the conflict unresolved.

On the 27th, an amendment to the Electronic Financial Transactions Act, led by Yoon Kwan-seok, chairman of the National Assembly’s Political Affairs Committee and member of the Democratic Party of Korea, included a provision in the supplementary clauses stating that “the Financial Services Commission’s supervision and inspection shall be excluded for KFTC operations linked with the Bank of Korea.” It also included an exemption from the electronic payment transaction clearing business licensing procedures for the KFTC. This compromise appears to be a conciliatory gesture from the Financial Services Commission in consideration of the Bank of Korea’s opposition.

However, the Bank of Korea’s stance differs. They interpret defining the clearing business in the main text as a supervisory target and then exempting reporting, data submission, and inspection duties in the supplementary clauses as meaning that the Financial Services Commission claims jurisdiction over the payment and settlement clearing business through this amendment. Moreover, the Bank of Korea points out that the proposal to re-delegate the payment and settlement operations currently managed by the Bank of Korea back to itself directly conflicts with Article 81, Paragraph 1 of the Bank of Korea Act.

The Financial Services Commission appears perplexed by the Bank of Korea’s sharp opposition. Nevertheless, they maintain that they cannot concede supervisory authority over big tech companies. Their reasoning is that if an accident occurs during the clearing and settlement process of big tech companies, it would be difficult for the Bank of Korea to take responsibility, so the Financial Services Commission must supplement oversight through prior supervision.

The problem is that this conflict seems to be perceived as a kind of turf battle. There is growing suspicion that the core of the conflict is whether the Korea Financial Telecommunications and Clearings Institute, a de facto subsidiary of the Bank of Korea, will come under the control of the Financial Services Commission.

It may be natural for conflicts to arise among institutions whenever a new industrial system emerges. However, this issue has been a predicted debate for several years and has undergone sufficient discussion for over half a year. Despite this, instead of mediation, the parties continue to show persistent confrontation, which is disheartening. This is why a comment on a portal site describing it as “a job battle between the Bank of Korea and the Financial Services Commission for post-retirement employment” stands out so much.

This content was produced with the assistance of AI translation services.