Ministry of SMEs and Startups Begins 'Sangsaeng Payment' Distribution to Retail Industry

Minister Lee Young, Ministry of SMEs and Startups Photo by Yonhap News

[Asia Economy Reporter Donghyun Choi] The Ministry of SMEs and Startups announced on the 22nd that it held the ‘Public Home Shopping Distribution Network Win-Win Payment Introduction Ceremony’ to commemorate the introduction of the ‘Distribution Network Win-Win Payment,’ the first of its kind in the distribution industry.

With the introduction of the distribution network win-win payment by Public Home Shopping, small business owners operating within Public Home Shopping will be able to early-cash annual funds worth 720 billion KRW at any time before the settlement date of sales proceeds. This is expected to expand the benefits of win-win payments, which were mainly operated in the manufacturing sector, to small business owners and SMEs in the distribution sector.

The distribution network win-win payment is a payment method improved by the Ministry of SMEs and Startups to allow small business owners and SMEs in the distribution industry to secure cash even before receiving sales proceeds.

So far, win-win payments have been mainly used in manufacturing and have steadily increased in scale. From the introduction of win-win payments in 2015 until the end of October this year, a cumulative total of 803.6415 trillion KRW has been paid to lower-tier suppliers of large corporations. In particular, the annual payment performance has exceeded 100 trillion KRW for four consecutive years since 2018.

This is because many companies empathized with the good intention of win-win payments, which provide the credit of large corporations to lower-tier suppliers delivering to large corporations, enabling them to secure cash using the credit of large corporations when necessary, and thus expanded their use. However, there were limitations in applying the existing win-win payment method to small business owners and SMEs in the distribution industry who only engage in consignment sales without delivering goods.

The Ministry of SMEs and Startups revised the payment method of win-win payments for this distribution network win-win payment. Instead of providing the credit of large corporations, it pays consignment sales proceeds to tenant companies using the idle funds of distribution platform companies as collateral in the win-win payment method.

Until now, companies operating on distribution platforms faced difficulties in securing funds, often resorting to high-interest loans to purchase new goods before receiving settlement of sales proceeds. The newly introduced distribution network win-win payment is seen as encouraging because it offers tenant companies a new way to secure cash at low cost.

Public Home Shopping, the first to introduce the distribution network win-win payment, pays all sales proceeds worth 720 billion KRW annually through win-win payments, supporting small business owners and SMEs operating within it to secure cash in advance at a low cost of 0.8% annually if they need cash before the consignment sales proceeds settlement date.

It is expected that if win-win payments spread to the online shopping industry and are used for just 5% of the total online shopping transaction volume, it will newly supply more than 9.6 trillion KRW of liquidity annually to tenant companies.

Detailed information on how to receive sales proceeds through distribution network win-win payments and other usage details can be obtained through the Win-Win Payment Call Center.

Minister Lee Young of the Ministry of SMEs and Startups said, “Win-win payments will greatly help small business owners and SMEs who are struggling due to recent high inflation, high interest rates, and high exchange rates to secure cash early when needed,” adding, “I ask more companies to actively participate in using win-win payments so that it can be a great support to small business owners working in the distribution industry.”

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