Will the Electronic Financial Transactions Act Entering National Assembly Review Find a Consensus?

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[Asia Economy Reporter Kiho Sung] The National Assembly's Political Affairs Committee is set to begin full-scale discussions on the amendment to the Electronic Financial Transactions Act (EFTA). Amid ongoing conflicts between the Financial Services Commission and the Bank of Korea over the 'Big Brother' controversy, attention is focused on whether a consensus can be reached during the bill review process in the National Assembly.

According to political circles on the 22nd, the Political Affairs Committee will hold the first subcommittee meeting for bill review and start examining the EFTA amendment.

This amendment includes the introduction of new licenses such as Payment Instruction Transmission Business (My Payment) and Comprehensive Payment Settlement Operators, restructuring the regulatory framework for electronic financial businesses including rationalization of entry regulations, and provisions related to the maintenance and promotion of the digital financial industry, such as allowing postpaid payment services (small amount) for payment settlement operators.

However, the Financial Services Commission and the Bank of Korea have consistently engaged in off-the-record disputes over this bill. The amendment establishes electronic payment transaction clearing as a new category for fintech management under the Financial Services Commission and grants the Commission supervisory authority over the Korea Financial Telecommunications and Clearings Institute, which acts as the electronic payment transaction clearing institution. The Bank of Korea has opposed this part since before the bill was proposed.

The two institutions particularly clash over the mandatory external clearing to ensure transparency of fund transactions by big tech companies such as Naver and Kakao. Clearing refers to the process of calculating the total amount of money exchanged between financial consumers through financial institutions and simplifying the settlement by only settling the net difference between institutions. Under current law, unlike banks, transactions through big tech companies do not undergo clearing procedures through an external institution (Korea Financial Telecommunications and Clearings Institute).

The Financial Services Commission argues that as big tech platforms rapidly increase their user deposit amounts, this measure is necessary to prevent potential risks in the future. On the other hand, the Bank of Korea opposes this, stating that the Financial Services Commission could extensively control the operation and management of the payment and settlement system, which is a core function of the central bank.

Although the Blue House has recently stepped in to mediate, given the significant differences in positions between the two institutions regarding the bill, it seems unlikely that the bill will be passed soon. Therefore, considerable difficulties are expected until the EFTA amendment is approved by the National Assembly.

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