Kakao Pay's Indefinite MyData Business... Can It Overcome This Time? (Comprehensive)

Financial Authorities to Conduct Second Review Next Month
Over 80 Companies Seek Business Approval
Key Issue: 'Major Shareholder Eligibility'

[Asia Economy Reporter Kiho Sung] As financial authorities begin preparations for the second round of reviews next month for the Personal Credit Information Management Business (MyData), attention is focused on whether Kakao Pay can be granted relief. The financial authorities are exploring various options, including contacting other institutions such as the People's Bank of China. However, more time is needed before reaching a conclusion.

According to the financial sector on the 29th, the financial authorities will announce the schedule for the second phase of 'MyData and other data industry licensing' after the Financial Services Commission's resolution on the 31st. Initially, the authorities planned to accept preliminary applications for the second licensing round within this month, but due to the time required to coordinate the review direction, it was decided to proceed in April. It is known that a total of about 80 companies expressed their intention to participate in this demand survey.

The core issue in the second review is the suitability of major shareholders. This is because major shareholder risks were particularly highlighted during the first review process. In November last year, during the preliminary licensing process for the MyData business, the review for six companies?including four affiliates of Hana Financial Group (Hana Bank, Hana Financial Investment, Hana Card, Fink), Samsung Card, and Gyeongnam Bank?was temporarily suspended due to major shareholder sanction issues. According to the Credit Information Business Supervision Regulations, if a major shareholder is involved in a criminal lawsuit or is undergoing sanction procedures by financial authorities, they are excluded from the review.

The most notable case among these is Kakao Pay. Kakao Pay applied for the preliminary MyData license review in December last year but failed to receive preliminary approval due to incomplete submission of documents inquiring about sanctions by Chinese authorities on its second-largest shareholder, Alipay Singapore Holdings. The financial authorities' major shareholder suitability review targets shareholders holding 10% or more of shares. Kakao Pay's shareholding structure is 56.1% by Kakao and 43.9% by Alipay, making it difficult to adjust shares for the main license review.

To pass the financial authorities' major shareholder suitability review, it is necessary to confirm that Ant Group, the parent company of Alipay Singapore Holdings, has not been sanctioned by Chinese financial authorities. Although Kakao Pay submitted all related documents, the financial authorities withheld approval citing the lack of official documents from Chinese authorities. In other words, this case is complicated by friction between the Chinese government and local companies, regardless of fintech business capability or ethics.

Particularly, attention is drawn as the Chinese government strengthens regulations on the digital economy by revising the Anti-Monopoly Law for the first time in 13 years. Due to regulatory risks in China, issues have arisen regarding the business expansion of domestic financial companies that received investments from local platform companies. For financial companies with relatively high proportions of overseas shareholder investments, the suitability review of overseas major shareholders could hinder entry into new domestic businesses. Additionally, it may discourage attracting foreign investors. Some express concerns that the Chinese authorities might exploit regulations to suppress the growth of Korean companies amid tightening regulations.

As criticism arises that "domestic licenses are being approved by foreign authorities," the financial authorities have begun exploring various measures. They are also discussing alternatives to situations where overseas major shareholders affect domestic business licensing.

However, it seems unlikely that a conclusion will be reached immediately. A Financial Services Commission official stated, "We are internally exploring various options regarding Kakao Pay, but since clear confirmation from Chinese authorities is necessary, a conclusion will not be reached within this month."

Meanwhile, attention is also focused on how other companies whose reviews were suspended due to major shareholder suitability issues will respond. Hana Financial Group, excluded due to a prosecution investigation, is waiting for related regulatory revisions and has recently begun preparations such as building IT systems related to MyData. Additionally, Hana Card, an affiliate, plans to collaborate with Busan City, NICE Information Service, the Financial Data Exchange, and Welcome Savings Bank, which has obtained a MyData license, to share technical know-how.

In contrast, Samsung Card, whose major shareholder Samsung Life Insurance received an 'institutional warning' in December last year, has suspended all related businesses until a decision is made by the financial authorities.

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