Merge Point... How Did It End Up in a Refund Crisis? [Song Seungseop's Financial Light]

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Subscribers flocked to the headquarters due to the reduction of Merge Point merchants
[Image source=Yonhap News]

[Asia Economy Reporter Song Seungseop] The controversy over ‘Merge Point’ remains heated. Consumers have visited the company to request refunds, and among consumers, there are calls for financial authorities to take responsibility. How did such a situation suddenly arise?

Merge Point is a discount platform application (app) operated by ‘Merge Plus’. When users pay 8,000 won in cash through the app, 10,000 won worth of ‘Merge Money’ is charged, which could be used like cash at affiliated merchants. The affiliated companies reportedly included about 60,000 stores from 200 brands such as large supermarkets, convenience stores, and coffee shops.

Because goods could be purchased at a 20% discount, Merge Point grew rapidly. At one point, it gained popularity through word of mouth, reaching 1 million users and an average of 200,000 daily visitors. The transaction volume grew to about 30 to 40 billion won before the incident. As a result, some consumers began preloading large amounts of money and using Merge Money.

However, on the 11th, Merge Point suddenly announced a reduction in operations, citing ‘legal issues’. They stopped payments at convenience stores and large supermarkets, which were major usage locations. The number of places where points could be used was drastically reduced from about 200 to around 20.

The problem was the ‘Electronic Financial Transactions Act’. According to this act, if a payment method is provided across two or more industries, the provider must register as an ‘electronic financial business operator’ with the financial authorities. Under the regulations, the company must have capital ranging from at least 500 million won to a maximum of 3 billion won. The debt ratio cannot exceed 200%. They are also regulated on professional personnel, IT infrastructure, financial soundness, and investment capacity.

Merge Point provided a kind of ‘prepaid’ function where money is charged in advance and used later, but it was not registered as an electronic financial business operator. The Financial Supervisory Service (FSS) expressed the opinion that Merge Money could be considered prepaid, and Merge Plus accepted this. The current limitation of payment usage to ‘restaurants’ is due to this reason.

As soon as the FSS’s criticism became known, affiliated companies demanded that Merge Plus immediately pay the settlement amounts. Partnerships were also terminated. As the number of affiliates decreased and it was revealed that the company was unregistered, consumers began to withdraw. Consumers who had preloaded large amounts of money started demanding refunds due to concerns about losses.

Users began flocking to the Merge Point headquarters located in Yeongdeungpo-gu, Seoul. Due to anxiety that they might not get their money back, they visited the company directly. On internet community sites, rumors spread that people had gone to the company and retrieved their money, attracting even more consumers. Merge Plus announced through a notice that they would refund 90% of the charged amount and that offline refunds would be completely suspended.

Because Merge Point is an unregistered company, it has not become a formal investigation target of the financial authorities. However, given the seriousness of the matter, they have stated that if illegal activities are found, they will file criminal charges.

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