Timon, KakaoPay, and Others Hold 2.9 Trillion KRW in Prepaid Balances... Hundreds of Billions in 'Leftover Change Income'

by Lim Chulyoung

Published 20 Oct.2024 15:13(KST)

Updated 20 Oct.2024 15:15(KST)

Prepaid Business Operators' Prepaid Charges Steadily Increasing
Prepaid Operators' 'Remainder Income' Expected to Expand... 48.9 Billion KRW Last Year, 23.9 Billion KRW in First Half of This Year
Assemblyman Lee Kang-il: "It Is Unreasonable for Remainder Income to Become a Revenue Source for Companies"

Timon, KakaoPay, and Others Hold 2.9 Trillion KRW in Prepaid Balances... Hundreds of Billions in 'Leftover Change Income'

Prepaid charging service providers represented by TMON, Kakao Pay, and T-money have collected approximately 2.9 trillion KRW in prepaid charges in the first half of this year alone, showing a rapid increase in scale.

According to data submitted by the Financial Supervisory Service to National Assembly member Kang-il Lee on the 20th, the total amount of prepaid charges by domestic prepaid operators (82 companies) over the past five years was 1.67 trillion KRW in 2019, 2.1586 trillion KRW in 2020, 2.9934 trillion KRW in 2021, 2.4771 trillion KRW in 2022, 2.692 trillion KRW in 2023, and already recorded 2.889 trillion KRW in the first half of 2024. This represents an increase of about 246% compared to the total prepaid charges in 2019.

As of the first half of this year, the company that collected the most prepaid charges was Kakao Pay, recording 558.1 billion KRW (19.3%). Following were SM High Plus (298.7 billion KRW), Korea Minting and Security Printing Corporation (284.1 billion KRW), Naver Financial (278.2 billion KRW), and T-money (215.9 billion KRW) in the top ranks.

As prepaid charges continue to increase, the ‘breakage income’ of prepaid operators is also expected to expand. Breakage income refers to additional revenue generated for businesses when consumers do not fully use the prepaid products they purchased. According to Article 64 of the Commercial Act, after the five-year commercial statute of limitations, the unused amounts by consumers ultimately belong to the business operators.

The breakage income earned by major prepaid operators (33 companies) showed a steady increase, with about 44.3 billion KRW in 2021, 42.1 billion KRW in 2022, and 48.9 billion KRW in 2023, already reaching 23.9 billion KRW in the first half of 2024. The company with the highest breakage income was T-money, accounting for 47.7% of the total amount, or 11.4 billion KRW. Following were SM High Plus (2.3 billion KRW), Lee Dong-ui Jeulgeoum (2.1 billion KRW), MyBi (1.9 billion KRW), and Korea Cultural Promotion (1.3 billion KRW) in the top ranks.

In contrast to dormant deposits and insurance funds that have passed the statute of limitations and are transferred to the Korea Inclusive Finance Agency for refund and inquiry, prepaid charges lack related legal regulations and thus directly become corporate profits, which is causing public outrage among consumers, according to Representative Lee.

Representative Lee emphasized, “It is unreasonable for breakage income to become a source of corporate revenue,” and added, “In response to the increasing trend of prepaid charges, it is urgent to establish legal and institutional measures to protect consumer rights, including reasonable handling of breakage income.”