Top financial regulator highlights need to overhaul credit payment system

The chief of the financial regulator on Thursday emphasized the need to reform the country's online payment system following massive payment delays at two e-commerce platforms. Kim Byoung-hwan, head of the Financial Services Commission (FSC), said the government will also seek to establish new regulations governing payment gateway (PG) service providers. "The recent TMON and WeMakePrice incident was a problem that occurred under the complex payment system in a newly emerging industry such as e-commerce," Kim said in a meeting with the heads of 15 credit finance businesses, including credit card companies and capital firms. "The government plans to come up with ways to ensure the safety of electronic transactions, along with a regulation system for PG firms," added Kim. "(It) also plans to look into a possible need to redesign the very payment system, along with ways to improve regulations related to the problem in hand." The government said Wednesday that delayed payments by the two e-commerce platforms, owned by Singapore-based Qoo10, have amounted to nearly 820 billion won (US$615 million) so far, and are expected to reach up to 1.3 trillion won. "I ask credit card firms to play a more responsible role in enhancing the stability of the payment system since they play a key role in the local payment system," Kim told the meeting, according to the FSC. To the heads of capital firms at the meeting, the FSC chief called for "swift resolution" of weak real estate project finance (PF) loans, which many believe may pose a serious threat to the local economy amid growing household debts. "If needed, the government, too, will actively consider additional steps to support the resolution of bad PF loans," he said. The total value of outstanding PF loans stood at 134.2 trillion won as of end-March, while the delinquency ratio on such loans stood at 3.55 percent, up 0.85 percentage point from three months earlier, the financial regulator said earlier. Source: Yonhap News Agency