MyPayment Implementation Imminent... Financial Upheaval Foreseen (Comprehensive)

Opening of the MyData Service Era
Related Laws Scheduled for Discussion in February National Assembly

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] The government's electronic finance promotion plan is broadly divided into Personal Credit Information Management Services (MyData) and Payment Instruction Transmission Services (MyPayment). The plan aims to actively foster the fintech (finance + technology) industry and startup companies through a two-track strategy.

With the MyData service era opening next month and the amendment to the Electronic Financial Transactions Act expected to pass the National Assembly within this year, financial market liberalization measures such as MyPayment and comprehensive payment settlement licenses will be fully implemented, making a major restructuring of the financial industry inevitable.

Once MyData is implemented, consumers will be able to check their information scattered across various institutions and companies all at once, and by providing their information to service providers, they can receive recommendations for customized products or services.

Furthermore, with the upcoming National Assembly discussions on MyPayment implementation and the expansion of comprehensive payment settlement businesses scheduled for February, a rapid restructuring of the financial industry is anticipated. At the end of last year, Representative Gwansuk Yoon of the Democratic Party of Korea, in consultation with the Financial Services Commission, proposed an amendment to the Electronic Financial Transactions Act containing these provisions.

MyPayment is a service that allows consumers to make payments without holding payment funds. It is easy to understand by thinking of credit cards. If a fintech company obtains a comprehensive payment settlement license, it can issue accounts, which was previously possible only for banks and other financial institutions. Once the related bill passes, big tech (large information and communication companies) and fintech companies based on data will become 'quasi-banks' capable of performing most banking operations except deposits and loans.

For example, consumers could create 'Naver·Kakao accounts' to use as salary accounts, and from these accounts, they could set up automatic transfers for card payments or insurance premiums. Additionally, postpaid payments up to 300,000 KRW per month would be possible, enabling the use of '00Pay' like a credit card. Although there is no deposit function and thus no interest earned, points can be earned proportionally to payment performance.

However, financial companies oppose the policy of effectively opening all banking operations to fintech firms, arguing that it could create a 'big tech dependency structure.' Especially as big tech companies like Naver and Kakao increase their market influence, financial companies claim that because they are electronic financial operators, they face less regulation compared to traditional financial sectors and that data sharing is unfair.

Regarding the comprehensive payment settlement license, criticism has also arisen that the minimum capital requirement of 20 billion KRW effectively makes it a playground for big tech companies. Furthermore, considering that big tech companies operate point systems close to cash, there are calls for additional discussions on clear definitions and provision limits concerning the de facto interest payment functions of electronic financial operators.

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