'Gaetjeonhyueop' Amendment to the Electronic Financial Transactions Act... A Long Way to Agreement (Comprehensive)

Financial Services Commission and Bank of Korea Clash Over Supervisory Authority
Industry Debates 'Same Work, Same Regulation'
Labor Unions Also Raise Voices Separately

[Asia Economy Reporters Jin-ho Kim and Ki-ho Sung] The conflict between traditional financial companies and big tech (large information and communication companies) and fintech over the easing of entry barriers to financial services has yet to find a resolution. The amendment to the Electronic Financial Transactions Act, which allows big tech and fintech to provide financial services and includes corresponding regulations, has gained renewed attention due to the 'Merge Point incident,' but discussions in the National Assembly remain at a standstill. The industry is clashing over whether the amendment constitutes a special privilege or prioritizes consumer benefits, and the dispute has escalated into a power struggle between the Bank of Korea and the Financial Services Commission over payment and settlement authority. With strong opposition from labor unions and sharp conflicts among stakeholders, reaching an agreement on the amendment is proving difficult.

The Electronic Financial Transactions Act Entangled with Government Ministries

According to the National Assembly Legislative Information System on the 7th, several related bills, including amendments to the Electronic Financial Transactions Act proposed separately by former Chairman Yoon Kwan-seok and Justice Party lawmaker Bae Jin-kyo, are currently pending in the National Assembly's Political Affairs Committee. In particular, Yoon's bill, which was proposed in November last year, has not been discussed even once in the relevant standing committee, the Political Affairs Committee. The stagnation of the amendment is mainly due to the brinkmanship standoff between the Bank of Korea and the Financial Services Commission. The Financial Services Commission's proposed amendment requires big tech to compulsorily provide personal transaction data to the Korea Financial Telecommunications & Clearings Institute (KFTC) and places the KFTC under the supervision of the Financial Services Commission.

The Bank of Korea has strongly opposed this, arguing that the Financial Services Commission's establishment of supervisory authority over the KFTC infringes on the Bank's inherent payment and settlement duties. According to political sources, the biggest reason the amendment has not been discussed since its submission to the Political Affairs Committee in February is the lack of agreement between the two government ministries.

A member of the opposition party in the Political Affairs Committee said, "In most cases, government-led bills are coordinated in advance with the ruling party to some extent," adding, "However, this bill was submitted without any prior coordination, so the government and ruling party need to resolve this issue first."

Recently, there have been expectations that the amendment will gain momentum after Bank of Korea Governor Lee Ju-yeol and newly appointed Financial Services Commission Chairman Ko Seung-beom pledged to establish a cooperative system to resolve major issues during their meeting. Since Chairman Ko has long worked closely with Governor Lee as a member of the Bank of Korea's Monetary Policy Committee, it is anticipated that they can narrow the differences that have existed between the two institutions. However, so far, the two leaders have only reached consensus on fundamental issues, and no agreement has been made on the specific points of conflict, leaving the possibility of future disputes.

Financial Sector and Big Tech Battle for Survival... Labor Unions Join the Fray

Even if agreement is reached between government ministries, the rift between traditional financial companies and big tech is deepening. They are unwilling to compromise, each advocating for different values: the principle of equal regulation for the same industry versus financial innovation.

The traditional financial sector opposes the amendment, criticizing the introduction of a comprehensive payment settlement business license. They argue that if the amendment passes, big tech will effectively engage in deposit and loan businesses such as account issuance, fund transfers, and payment of card bills and insurance premiums, without being subject to the same level of regulation as financial companies.

They also claim that introducing the comprehensive payment settlement business license will intensify big tech's financial monopoly. Labor unions from six regional banks, including Gwangju Bank, declared joint action, stating, "If the amendment is passed, regional funds will flow to large platforms, causing capital outflow from local areas and harming small and medium-sized enterprises and small business owners." The National Financial Industry Labor Union has also clearly opposed the amendment.

Big tech maintains that the amendment does not grant special privileges. They argue that even if the amendment passes, they cannot operate consumer deposits, so it is difficult to consider comprehensive payment settlement business as deposit and loan business. They also counter that the amendment imposes new obligations such as external clearing, increasing their burden. The KFTC labor union also supports the bill's passage, stating in a press release, "It clearly shows the minimum measures that must be taken under the Electronic Financial Transactions Act to protect consumers."

Experts point out that the controversy stems from the amendment allowing big tech to enjoy the benefits of existing financial institutions while avoiding high regulatory costs and obligations. They say the absence of the 'same function, same regulation' principle has led to this situation.

Professor Jeon Sung-in of Hongik University's Department of Economics said, "Allowing big tech to perform banking-like functions under a different name is a special privilege," adding, "It is desirable to apply strong regulations to big tech, just like banks, focusing on consumer protection."

Professor Lee Min-hwan of Inha University's Department of Global Finance also said, "(The current amendment) indeed has so-called blind spots," and expressed concern that "While big tech's behavior of entering systems created by financial institutions to profit may appear beneficial to consumers in the short term, it could ultimately cause harm through special privileges."

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