[What Do You Think] Institutional Infrastructure Urgently Needed Amid Fintech Industry Growth

Takryucheongron is a column featuring in-depth analysis and diagnosis by experts in the relevant fields on socially contentious topics. This week's topic concerns the amendment of the Electronic Financial Transactions Act.

The Korea Fintech Industry Association includes over 340 fintech (finance + technology) companies with diverse characteristics as member firms. Although the services provided and the scale of each member company vary greatly, their destination is the same: to provide convenient and secure services based on user experience (UX) and be chosen by more users. However, it is questionable whether the legal and institutional infrastructure necessary for numerous fintech startups to grow properly is adequately established. Overseas, where fintech-related policy support is actively carried out ahead of us, fintech unicorn companies have emerged in both advanced and emerging countries. According to a report by the Small and Medium Business Research Institute, as of November last year, there were 528 unicorn companies worldwide. Among them, fintech companies numbered 72, the largest group. In contrast, among Korea’s 13 unicorn companies, only one is fintech-related.

Considering the recent rapid growth trend of the fintech industry, the domestic digital financial legal and institutional infrastructure has relatively lagged behind the pace of change. To foster a digital financial ecosystem in the era of the Fourth Industrial Revolution, it is necessary to comprehensively revise the Electronic Financial Transactions Act, which was enacted before the advent of smartphones, and overhaul the entire regulatory system for electronic financial businesses. The fact that no company has registered as an electronic funds transfer business or electronic money business reflects the reality of a dormant system.

The amendment consolidates the current seven business categories into three core functions: payment, remittance, and agency, establishes a new payment instruction transmission business (My Payment), and significantly relaxes the minimum capital requirements. Through this, fintech startups and others will actively enter the electronic financial business, promoting competition and innovation in the financial market. This is the starting point for building an ecosystem where fintech unicorns can continue to emerge.

Furthermore, the Electronic Financial Transactions Act signals the introduction of new systems that enhance consumer benefits and information sovereignty, underscoring the need for prompt revision. In particular, My Payment is expected to create synergy when combined with the My Data service, which will be fully implemented in the second half of this year. It will eliminate complex and costly intermediary processes, enabling one-click completion from proposal to execution of personalized services for consumers. For small and medium fintech companies, it is an accessible small license system that facilitates the commercialization of ideas in payment and asset management fields.

The small-amount deferred payment service is an inevitable means to resolve the everyday inconvenience that users of electronic payment methods have always faced due to discrepancies between purchase amounts and prepaid balances. It is a desirable legislation that considers national convenience without uniformly prohibiting it by classifying it as a credit business.

There are cases where timely implementation in response to contemporary demands can achieve the intended legislative purpose and contribute to industrial development and consumer protection. The current amendment to the Electronic Financial Transactions Act is such a case. Given the explosive increase in the use of electronic payment services, it is desirable for the bill to pass the National Assembly as soon as possible to protect consumers.

Jang Sung-won (Secretary General, Korea Fintech Industry Association)

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