44% of Small Business Owners to Reduce Use of Online Platforms Amid 'Timeff Incident'

Emergency Survey by the Federation of Small Business Owners
Small Business Owners "90% Chance of Recurrence"
Settlement Cycle "Must Be Within 10 Days" 83%

Regarding the unsettled payment issue of sales proceeds by TMON and WEMAKEPRICE (TMEP), 90% of small business owners expressed concerns about recurrence.

The Korea Federation of Micro Enterprise Associations announced the report titled “Emergency Survey on Small Business Damage Related to the TMEP Incident” on the 13th. According to the report, the extent of damage to tenant companies caused by the TMEP incident was surveyed as ‘very large’ at 50.3% and ‘somewhat large’ at 16.9%, with 67.2% of respondents indicating significant damage.

Sellers and consumers affected by TMON and WEMAKEPRICE (Timep) are holding a black umbrella rally in front of the TMON office in Gangnam-gu, Seoul on the 13th.
[Image source=Yonhap News]

The causes of the TMEP incident were identified as moral hazard of platform management at 86.9%, and insufficient government market supervision functions and tenant protection systems at 82.2%, respectively.

Regarding the possibility of recurrence of delayed settlement issues on online platforms in the future, 68.2% responded ‘very likely’ and 22.6% ‘somewhat likely,’ totaling 90.8% who believe recurrence is possible.

Many small business owners also indicated they would reduce their use of online platforms due to this incident. Regarding the use of online platforms, 44.3% said they would reduce or stop using online platforms due to concerns about recurrence of this incident. This was followed by 36% who said they would maintain or plan to use them as essential for business operations, and 19.7% who had no experience using them and no plans to use them in the future.

Regarding the possibility of recurrence of delayed settlement issues on online platforms in the future, 68.2% responded ‘very likely’ and 22.6% ‘somewhat likely,’ totaling 90.8% who believe recurrence is possible.

When asked about a reasonable payment settlement cycle for online platform tenant companies, ‘within 5 days’ was the highest at 62.1%, followed by ‘within 10 days’ at 20.4%, and ‘within 15 days’ at 11.8%.

Regarding the protection of platform tenant companies, 81.2% responded ‘very necessary’ and 14% ‘somewhat necessary’ to the need for legislation such as the Payment Protection Act, which mandates insurance subscription for businesses above a certain scale and prohibits the use of sales proceeds for other business purposes. In total, 95.2% agreed on the necessity.

Furthermore, 91.1% of respondents agreed on the necessity of mandating an escrow account system (safe payment), a sales protection service where a third party intermediates transactions to ensure transaction stability, for the protection of platform tenant companies.

Additionally, 94.6% responded affirmatively to the need for mandatory subscription to payment guarantee insurance to prevent misuse and ensure safe custody of unsettled sales proceeds. Regarding the protection of platform tenant companies, 95.9% emphasized the need for mandatory disclosure to secure the financial soundness of platform companies, reflecting strong calls for fundamental institutional improvements.

Regarding solutions to the TMEP incident, ‘prompt compensation for small business owners’ was the highest at 61.1%, followed by ‘preparation of comprehensive support measures’ at 22.6%, and ‘institutional improvements to secure stability in the e-commerce market’ at 14.6%.

Cha Nam-su, Head of Policy and Public Relations at the Korea Federation of Micro Enterprise Associations, stated, “While regulations on settlement periods exist under the Electronic Commerce Act for consumers and the Large-scale Distribution Business Act for large distribution companies and tenant companies, there is no system for platform tenant companies. To prevent recurrence, it is necessary to establish fundamental and structural laws and systems that guarantee payment of sales proceeds, such as enacting the Payment Protection Act, mandating safe payment and payment guarantee insurance subscription, and requiring management disclosure by platform companies, thereby ensuring transparency and safety in electronic commerce.”

Meanwhile, this survey was conducted online, with a total of 314 small business owners participating from August 1 to August 7.

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