Prepaid Recharge Funds Fully Protected Through Separate 100% Management

Enforcement Decree of the Electronic Financial Transactions Act Passed at the Cabinet Meeting

From now on, prepaid electronic payment service providers must separately manage the full amount of prepaid recharge funds to protect users, and mobile gift certificates such as KakaoTalk Gifticons are also classified as prepaid electronic payment means, allowing recharge funds to be protected. In addition, supervision of small-amount postpaid payment services (BNPL), which allow postpaid payments similar to credit cards, will be strengthened to the level of credit card services.

The "Enforcement Decree of the Electronic Financial Transactions Act" containing these provisions passed the Cabinet meeting on the 3rd. It will be implemented from the 15th in line with the amendment to the Electronic Financial Transactions Act, which aims to eliminate regulatory blind spots for prepaid electronic payment means and strengthen the protection of prepaid recharge funds following the large-scale refund incident involving Merge Point.

First, the protection of users' prepaid recharge funds will be strengthened by mandating separate management of the full amount of prepaid recharge funds. Prepaid service providers are required to separately manage 100% or more of users' prepaid recharge funds to ensure their safe protection. Specifically, the funds must be managed through a prepaid fund management institution by trust, deposit, or payment guarantee insurance methods, and to prevent operational losses, they must be managed safely through methods such as purchasing government bonds, local government bonds, or deposits in banks and post offices.

To limit excessive discount issuance, only prepaid service providers with a debt ratio of 200% or less are allowed to issue discounts or provide reserve funds. Only the amount issued as discounts or reserve funds is included in the scope of separate management.

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Mobile gift certificates such as KakaoTalk Gifticons are also classified as prepaid electronic payment means and are thus protected. The amended Electronic Financial Transactions Act expanded the scope of supervision over prepaid service providers, and the enforcement decree stipulates that registration is exempted if the outstanding issuance balance is less than 3 billion KRW and the total annual issuance amount is less than 50 billion KRW.

Additionally, the level of supervision for small-amount postpaid payment services has been strengthened to the level of credit card services. To be approved for small-amount postpaid payment services, the company must be a corporation meeting financial soundness requirements such as a debt ratio of 180% or less. The maximum usage limit per user is 300,000 KRW, and the funds cannot be used for repayment of monetary debts or purchase of savings deposits. Related businesses are now obligated to set aside provisions for bad debts and loan loss reserves.

Furthermore, merchants acting as intermediaries for prepaid electronic payment transactions are required to provide transaction intermediary information, enabling users to identify the actual providers of goods and services.

The Financial Services Commission and the Financial Supervisory Service stated, "Since the protection measures under the Electronic Financial Transactions Act apply only to prepaid electronic payment means issued by registered businesses, we will thoroughly guide businesses newly required to register under the amended law and strictly supervise both new and existing businesses."

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