Website sales simplifiedBoth foreign and national consumers will be able to buy products that cost more than 300,000 won ($283) on Korean websites starting in June, when the current digital verification system will no longer be mandatory.
The Financial Services Commission and the Financial Supervisory Service said yesterday that authorities will revise a provision in the electronic financial supervision regulation to allow online financial transactions involving credit cards and debit cards to be completed without the verification system.
However, online bank account transfers of more than 300,000 won must continue to use the current certificate system.
“The measure will increase convenience for consumers at home and abroad and boost online transactions, bringing more foreigners to the domestic market,” said an FSC official.
According to the online shopping industry, foreigners purchased about 200 billion won worth of products on Korean websites last year, while Koreans bought more than 1 trillion won through direct overseas purchases on foreign websites.
But it will be up to the online payment agencies and card companies if they want to implement the system of payment without verification. Some companies may require consumers to be verified until they come up with an alternative to the current system.
The FSC said the measure could provide an opportunity to create new types of verification actions and allow financial institutions to make their own security choices.
The financial watchdog said it has decided to keep the verification system for money transfers from bank accounts due to high security risks.
“Card companies use separate tools like the Internet Safe Payment service or short message service to verify payers when they make online transactions, but online money transfers have no such tools, leading to more risks,” the FSC official explained.
Card users’ funds are safe even without the government’s verification system, because they can cancel their payments before products are delivered, the official said.
The abolishment of the verification system was discussed at the Blue House last month at a regulation reform meeting held between government officials and private experts.
Another target of deregulation is Korea’s ActiveX program, which is essential to accessing the verification certificate. ActiveX can only be installed on Microsoft’s Web browser Internet Explorer, which means it is less likely to be used by foreigners who prefer using Google’s Chrome or Firefox.
Experts expressed concerns over their ability to simultaneously repeal ActiveX and the verification certificate system at a time of high concern about personal information security, sparked by the nation’s worst data leaks from three major credit card companies early this year.
“Removing the two systems right away might pose serious threats to security of both online retail businesses and financial institutions,” said Lim Jong-in, dean of the Graduate School of Information Security at Korea University, at the meeting.
BY song su-hyun [email@example.com]