Big Brother wants to know what's for lunch
Is my 12:27 p.m. online order for a 10,000 won ($8) bowl of pho credit information that can be shared far and wide with financial institutions?
Regulators and retail companies are arguing that point now as they prepare for MyData, a government-led project that gives banking institutions access to customer information.
The project, which will be up and running in early 2021, is considered a gold mine. With the consent of customers, financial institutions can gather scattered customer data and use them to create new services. The project is possible only because of legislation passed earlier this year that relaxes laws on privacy.
Retail companies claim the project is unfair as it allows other companies to take consumer information they have spent time and money collecting. The scope of "credit information" is particularly contentious. According to the enforcement decree of the Use and Protection of Credit Information Act announced in August, “records of orders received” by e-commerce companies are considered to be credit information — in other words, the pho ordered via an app.
With the consent of the customer, a bank approved for MyData participation will not only know the time of the purchase and the purchased amount but also exactly what the person bought and how many items they purchased from the likes of eBay, 11th Street and Baedal Minjok.
Online retailers strongly oppose this, arguing that the details of individual purchases cannot be categorized as credit information.
"They think whether someone bought jajangmyeon or jjampong is credit information," said an e-commerce source using the Korean names for black bean noodles and spicy seafood noodle soup. "Simply put, that has nothing to do with a person’s credit."
The Korea Internet Corporations Association and the Korea On-Line Shopping Association (Kolsa) issued a statement on Aug. 19 urging the government to adjust the regulations.
Regulators are sticking to chapter and verse. They cite the Credit Information Use and Protection Act, which states that "information on types, duration, content and conditions" of commercial transactions are "credit information."
“Shopping information recorded by an e-commerce site can be considered a type of credit information. This definition already existed in the law and was not newly included,” said an official from the Financial Services Commission.
Financial companies have been asking authorities to unlock customer shopping details for some time. They claim that the original goal of the MyData project was to provide personalized services by combining credit information from both financial and non-financial sources.
"MyData's business will likely expand into non-financial areas such as medical and health care in the future. When that happens, will companies still hold back such information on the grounds that it is not financial information?" said an employee of a financial institution. “In order to expand services, companies need to open up as much information as possible and participate in healthy competition."
Credit card companies have also resisted the harvesting of data they collect, but the regulators have pushed them to open their databases more.
E-commerce companies can shift online payments to subsidiaries to protect the information from the MyData initiative. Records collected by IT companies are exempt from the MyData program, so the electronic payments subsidiary of Naver does not have to share data with the parent company and is outside the range of the new law. Its customer data will not be pulled into the MyData system.
EBay, 11th street and SSG.com are registered in such a way that they can be covered by MyData. Coupang and Naver are not.
“Some companies would rather spin off their electronic payments division than release all of their customer information,” said an anonymous industry source.
BY SUNG JI-WON [email@example.com]
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