TMON in turmoil: Payment systems block Qoo10 platforms

Industry

Published: 24 Jul. 2024, 19:32 Updated: 24 Jul. 2024, 19:59

TMON in turmoil: Payment systems block Qoo10 platforms

E-commerce platform TMON's headquarters in Gangnam District, southern Seoul, as pictured on Wednesday [YONHAP]

Delays in earnings withdrawals for sellers on Qoo10-owned TMON and WeMakePrice has led to payment gateways pulling out, making credit cards unusable as an option on the e-commerce platforms as of Wednesday. Kakao Pay also became unusable.

Customers who have bought goods or services on the two platforms have rushed to receive refunds, but are reportedly facing difficulties. The exit of payment gateways means that refunds cannot be processed through card payment cancellations, with customers instead having to receive the money through bank transfers.

The financial authorities scrambled to take measures, according to an official at the presidential office, with the Fair Trade Commission working on consumer protection measures and the authorities ordering the platform operators to come up with financing plans.

Customers swarm WeMakePrice's headquarters in Gangnam District, southern Seoul, at 6 p.m. on Wednesday. [LEE BO-RAM]

Outstanding balance spooks banks

The focus is the exact amount of the pending settlement, a figure that is hard to track at this stage as developments continue to unfold.

A source at a payment gateway vendor with business ties with the two troubled e-commerce sites said that the affected amount per agency is estimated between 5 billion won ($3.6 million) and 10 billion won.

The related vendors include NICE Information & Telecommunication, Korea Information & Communication, KGinicis and Toss Payments.

Major banks, including KB Kookmin Bank and Standard Chartered Korea, have also halted presettlement loans to sellers on the two platforms from Tuesday.

Banks provide sellers on e-commerce platforms with presettlement loans as their earnings, which are paid back by the e-commerce platform to the banks at a later date.

“We have provisionally halted presettlement loans for TMON and WeMakePrice to prevent any further damage to customers who are affected by the temporary delays in payments on the platforms, as well as to protect our finances,” a spokesperson for KB said.

The temporary ban has only been imposed on the two marketplaces, the bank added.

Happymoney gift cards have been unusable on certain major payment system as of Tuesday. [HAPPYMONEY]

Gift card ban

Concerns over the delayed payments from TMON have further snowballed with a short-term ban on the usage of gift cards on major platforms from Tuesday, as reimbursement uncertainties arose over accepting the cards recently sold at a discount by the retailer.

Happymoney gift cards are not being accepted as a payment option, nor can be redeemed as points, on partnered platforms including Naver Pay, Google, Payco and SSG Pay. Happymoney is partnered with around 42,000 marketplaces that accept their gift cards as payment including bookstores and restaurants, and in online gaming or shopping.

The gift cards had been sold on TMON at a 10 percent discount, effectively meaning that a card that had a value of 50,000 won in partner marketplaces could be bought for 45,000 won. They were a popular item on TMON for the steep rate compared to the average discount of 2 to 3 percent offered by rival retailers.

Culture Land gift cards — the most circulated in Korea — have also been banned from some partnered platforms including SSG Pay.

TMON’s upfront billing payment system that could be used like cash on the platform, named TMON Cash, has also been blocked from being redeemed for points by NHN through its mobile payment system Payco. Refunds for TMON Cash, which like the gift cards had also been sold at a 10 percent discount, are not currently available, but a full reimbursement is available through the platform's insurer, Seoul Guarantee Insurance Company.

Disrupted summer plans

Local media outlets cited industry experts estimating the total settlement owed by the two marketplaces in just the travel industry to amount to at least 100 billion won.

Travel industry insiders, however, said that the reported estimates are largely inaccurate, although they did not reveal an amount when contacted for a number.

Empty seats are on a flight on a Incheon to Hong Kong route is pictured on Saturday. [YONHAP]

Travel agencies are asking customers who have had to cancel their purchases on TMON and WeMakePrice to sign up for travel packages directly with the agencies, according to spokespersons from Hanatour and Modetour.

Modetour will maintain the terms and conditions and prices applied to purchases on the platform for the month of August, the company’s spokesperson said.

The two agencies have notified TMON and WeMakePrice that the payment backlogs must be cleared by Thursday. Should the payments not be made, Modetour will be terminating its contract with the two platforms, while Hanatour is considering asking for proof of content.

What's next for TMON and WeMakePrice?

A representative for TMON and WeMakePrice could not be reached for a comment.

According to local media reports earlier on Wednesday, a TMON spokesperson said payments for small-scale sellers were being made, while they were asking for larger sellers to wait. Efforts were reportedly being made to normalize the refund process. The company did not have an estimate on the total amount of the damages.

Customers swarm Mergeplus's headquarters in Yeongdeongpo District, western Seoul, in August 2021, asking for refunds for Mergepoint. [NEWS1]

Online users have pointed out how the ongoing issues from the Qoo10-owned platforms are reminiscent of the Mergepoint debacle that erupted in 2021.

The once-popular online discount app abruptly halted sales of its Mergemoney coupons and reduced the number of stores where they could be used, leading to a large swarm of customers at the offices of the app’s operator, Mergeplus, demanding refunds. Mergeplus was ordered to pay 225 million won to the victims of the later unusable coupons by a court in September 2023.

Sellers on TMON and WeMakePrice have been pulling their services from the platforms, citing difficulties in withdrawing their earnings. This has led to abrupt cancellations for customers who have bought goods and services on them.

The retailers have allegedly been unable to make the payments due to a liquidity shortage within Qoo10, with the marketplace having rapidly expanded its portfolio to include TMON, WeMakePrice, Interpark Commerce, AK Mall and Wish.

BY KIM JU-YEON, PARK EUN-JEE [kim.juyeon2@joongang.co.kr]