Police raid Kakao Pay in illegal transaction probe

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Police raid Kakao Pay in illegal transaction probe

Published: 04 Jul. 2023, 10:52 Updated: 04 Jul. 2023, 11:06

[KAKAO PAY]

Kakao Pay was raided over allegations that it pocketed illegal payments worth multi-hundred million won from a value-added network (VAN) company in growing its franchise, according to financial regulators Tuesday.

One hundred million won is approximately $77,000.

The anti-corruption unit of the Seoul Metropolitan Police Agency raided Kakao Pay headquarters in Seonganm, Gyeonggi, Monday over charges that it illegally received payments from NICE Information & Telecommunication.

The VAN company, in order to maintain close business ties with the virtual wallet service provider, paid agency fees to Kakao Pay branches that Kakao Pay should have provided for expanding the number of stores that accept on-site Kakao Pay payments, according to police and Financial Supervisory Service (FSS).

NICE Information & Telecommunication reportedly funneled the payments between 2021 and 2022.

Korea's financial law prohibits payment service companies from receiving or demanding benefits from VAN companies for using their networks. VAN companies are also banned from providing grants to a payment company.

The FSS requested the police to launch an investigation to secure evidence on whether Kakao Pay demanded the payments first or NICE Information & Telecommunication first suggested providing them, according to an FSS spokesperson.

Kakao Pay stock is trading at 46,400 won as of 10:30 a.m. Tuesday, down 4.43 percent from the previous session's close.

BY SOHN DONG-JOO [sohn.dongjoo@joongang.co.kr]