Financial Services Commission and Bank of Korea Disagree on Electronic Financial Transactions Act... Deepening Concerns for Small Fintech Firms

Big Tech Starts Postpaid Payments This Month
Worried About Losing Market Lead

[Image source=Yonhap News]

[Asia Economy Reporter Kiho Sung] As discussions on the Electronic Financial Transactions Act (EFTA) in the National Assembly continue to stall without significant progress, concerns are deepening among small and medium-sized fintech companies that have been seeking new business opportunities. Since the positions of the Financial Services Commission, the Bank of Korea, and financial labor unions remain at odds over the EFTA, there are expectations that the National Assembly's deliberations will be prolonged.

According to sources in the financial and political sectors on the 1st, the review of the EFTA, which was scheduled for the 22nd, has been postponed to the next session. The National Assembly's Political Affairs Committee intends to start discussions in the upcoming extraordinary session but has not yet set a specific date.

The slow progress in amending the EFTA is due to significant disagreements between the Financial Services Commission and the Bank of Korea. The Bank of Korea argues that the Korea Financial Telecommunications and Clearings Institute, chaired by the Bank of Korea, is the only entity authorized to clear electronic payment transactions. It also opposes the Financial Services Commission's interference in payment and settlement operations, which are roles of the central bank. On the other hand, the Financial Services Commission insists that external clearing for fintech company transactions must be included in the EFTA to ensure transparency in fund transactions.

With the bill's passage indefinitely delayed, small and medium fintech companies are under increasing pressure. If the market entry speed slows down while big tech companies dominate in capital and recognition, the gap could widen further. Starting this month, Naver Pay will allow postpaid payments up to 300,000 KRW per person. Postpaid payments by pay services, which are part of innovative finance, can operate regardless of the bill's amendment. Kakao Pay also plans to launch postpaid payment services soon. From the perspective of small and medium fintech companies, they can only watch as big tech companies take the lead.

The possibility of further delays in the bill's passage is also fueling anxiety. By-elections for the Seoul and Busan mayoral positions are scheduled this month, and depending on the election results, turmoil is expected in whichever party?the ruling party or the main opposition?suffers defeat. In May, both parties are set to elect new leadership at their national conventions, and a government audit is scheduled for June.

A representative from a small fintech company said, "With no prospect of the EFTA amendment passing, big tech companies are moving ahead with postpaid payment services. We have no choice but to watch their market dominance before the law passes, so the bill's passage in the National Assembly is urgently needed."

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