Chinese Authorities Responded but "Content Ambiguous"... The Future of KakaoPay 'MyData'

Ryu Young-jun, CEO of Kakao Pay. / Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Kiho Sung] Kakao Pay is still walking in the fog ahead of the final approval review for its Personal Credit Information Management Business (MyData) on the 27th. The review is delayed due to the 'major shareholder eligibility issue,' and ambiguous responses from Chinese authorities have emerged. The Financial Supervisory Service (FSS), which is in charge of the review, reportedly finds it difficult to make a clear judgment and is consulting with the Financial Services Commission (FSC).

According to the FSS on the 22nd, the FSS recently asked the Chinese regulatory authority, the People's Bank of China, whether Ant Financial, Kakao Pay's second-largest shareholder, had ever been sanctioned. However, the reply was ambiguous and in the form of an email, causing the FSS to deliberate.

An FSS official explained, "We received a reply from China, but it was in email format and was not the content we originally requested. It is difficult to determine the legal sanction status of Ant Group based on this alone, so we are consulting with the FSC."

According to the Credit Information Act supervisory regulations, if a parent company holding 10% or more of the shares of a MyData applicant company is sanctioned by authorities or involved in litigation, the review is suspended. Known as the 'review suspension system,' Ant Financial holds 43.9% of Kakao Pay's shares as the second-largest shareholder.

Kakao Pay applied for the preliminary MyData approval review in December last year. However, the review was put on hold due to incomplete document submission related to Ant Financial, the second-largest shareholder. Kakao Pay prepared and submitted all documents requested by financial authorities. However, the FSS, unable to verify Ant Group's eligibility under the 'review suspension system,' requested related materials from Chinese regulatory authorities.

Recently, the Chinese government's pressure on Ant Financial has unexpectedly hindered Kakao Pay. The Chinese government announced the suspension of Ant Financial's listing in October last year.

The 'review suspension system' is a decisive key to Kakao Pay's MyData business approval. Naver Financial, which previously received preliminary approval, also faced setbacks in its MyData business due to the shareholder regulation of holding 10% or more shares. When Mirae Asset Daewoo, holding 17.66% of shares, was investigated by prosecutors for violating the Foreign Exchange Transactions Act, the review was halted. Eventually, on the 11th, Mirae Asset Daewoo reduced its shareholding to 9.5% by exchanging common shares for convertible preferred shares (CPS) on a 1 to 1 basis, narrowly avoiding the review suspension condition.