TimonF-Originated Settlement Cycle Issue Brings Card Companies' 'Payment-Only Accounts' to the Surface

[Image source=Yonhap News]

Amid growing social discussions on the need to shorten the settlement cycle for card payment amounts due to the Tmon and Wemakeprice incidents, the long-awaited introduction of a 'dedicated payment settlement account' for the card industry has resurfaced.

According to the Financial Services Commission on the 22nd, Chairman Kim Byung-hwan met with the chairman of the Credit Finance Association and CEOs of 15 credit card companies that morning, urging the card industry to take a responsible role in the domestic payment settlement system. In response, the card industry requested permission to operate dedicated payment settlement accounts for card companies.

A dedicated payment settlement account is an account directly issued by a card company, allowing consumers, for example, to open a 'Samsung Card account' or a 'Shinhan Card account.' If card companies create dedicated payment settlement accounts, they can reduce transaction processes and costs. Additionally, they can receive payment amounts without bank fees and secure opportunities to expand into various financial businesses.

This proposal is based on recent discussions about the settlement cycle triggered by the delayed settlements involving Tmon and Wemakeprice. The incident revealed that longer settlement cycles could cause serious liquidity problems for online platforms and their merchant sellers. Consequently, the Financial Services Commission held a 'Card Fee Eligible Cost System Improvement Task Force (TF)' meeting on the 20th, announcing plans to uniformly shorten the payment cycle by one day for small and medium-sized merchants and encourage cycle reductions for general merchants as well.

A card industry official said, "Within the card company platform, various services such as payments, payroll transfers, payment of fees and utilities, and recurring payments can be used in a one-stop manner." He added, "Having their own accounts allows for more advanced credit evaluations, contributing to additional customer benefits, and enables holiday payments to merchants, thereby improving benefits for small business owners." From the merchants' perspective, the transfer settlement cycle is expected to be shortened from the current 'business day count' basis to a 'calendar day count' basis, including holidays.

Chairman Kim also stated that this incident "occurred under the complex payment settlement structure of new industrial sectors such as e-commerce," and added, "Taking this as an opportunity, we plan to establish a regulatory framework for secondary and lower electronic payment gateway (PG) companies." He particularly pointed out that the recent payment settlement environment is rapidly and complexly changing in a different form due to the convergence between distribution and finance, the spread of non-face-to-face and multi-level payment structures, and the entry of non-financial businesses. He mentioned the need to consider not only institutional improvements for the current issues but also a more fundamental redesign of the system.

On the same day, Chairman Kim urged capital companies, which form another pillar of the credit finance sector, to manage the soundness of real estate project financing (PF), and asked new technology finance companies to strengthen their role as intermediaries in supplying private funds.

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