Level playing field promised in finance as fintech rises

Financial Supervisory Service chief Jeong Eun-bo speaks at a press event held in central Seoul on Wednesday. [FSS]

Fintech companies will be regulated the same as traditional financial institutions, according to the Financial Supervisory Service (FSS), the regulator assuring the market that a level playing field will remain as boundaries between old and new come down.

FSS Governor Jeong Eun-bo said on Wednesday that the organization will develop a disclosure system for simple payment service commissions to make sure that the fees are calculated fairly.

Tech companies typically charge higher commissions for online payments because they rely on card companies for processing and must pay them hefty commissions for handling the transactions.

He added that regulations for old and new finance will be the same.

The FSS "will study regulations on finance brokerage services in key countries, reflect opinions of the industry and set a general regulation," Jeong said at a press conference held in central Seoul.

An increasing number of companies that started off a tech firms have expanded into finance and are becoming more powerful within the business.

Naver's revenue from finance was 14 percent of total revenue as of June 2021, compared to 9.3 percent in 2019, according to the FSS. Kakao's finance revenue jumped to 8.6 percent from 4.6 percent over the same period.

Naver and Kakao provide simple payment services branded as Naver Pay and Kakao Pay. Some consumers have complained that commissions for simple payments on Naver Pay and Kakao Pay are higher than the commission charged by card companies.

Jeong added that the FSS will "make sure that the financial products recommended to consumers based on algorithms are not used against them" and further pledged to "improve cybersecurity for finance platforms to grow soundly."

The FSS plans to help financial companies grow into digital businesses by expanding the services they are allowed to offer and approve more regulatory sandboxes.

The program allows new and innovative businesses to be exempt from regulations for a minimum two years.

The press conference was attended by Naver Financial CEO Choi In-hyuk and Lee Seung-gun, CEO of Viva Republica, operator of Toss Bank.

Kakao Pay announced a drop in commissions by up to 0.3 percentage points and Naver Pay by up to 0.2 percentage points. The changes are effective Jan. 31.

BY JIN MIN-JI [jin.minji@joongang.co.kr]