Pressure from China's Ant Financial... Will Strict Korean Consumers Suffer? (Comprehensive)

PBOC's Ambiguous Response
Service Suspension Risk if Rejected

Ma Yun, Founder of Alibaba / Photo by Yonhap News

[Asia Economy Reporter Kiho Sung] Financial authorities will conduct the final approval review this week for 28 companies that received preliminary permits for Personal Credit Information Management Services (MyData). In particular, attention is focused on whether Kakao Pay, which was disqualified in the preliminary review due to missing documents, can pass the final review. If Kakao Pay fails again, consumer confusion for about a month will be inevitable. There is also criticism that domestic consumers may experience inconvenience due to internal issues in China.

According to the financial industry on the 25th, the Financial Services Commission will begin the final approval review for MyData at its regular meeting on the 27th. The on-site inspection of documents was already completed through the preliminary permit, and the final approval will focus on checking physical facilities. Therefore, it is expected that most of the 28 companies that received preliminary permits, except for some insufficient ones, will receive final approval.

In this final review, attention is focused on whether Kakao Pay, which requires verification of the “foreign major shareholder’s eligibility,” can obtain approval. Kakao Pay, which applied for the MyData preliminary permit review in December last year, was put on hold due to incomplete submission of documents related to its second-largest shareholder (43.9%), Alipay Singapore Holdings. Kakao Pay has prepared and submitted all the documents requested by the financial authorities. However, the authorities could not verify the eligibility issue of Ant Financial, the parent company of Alipay Singapore Holdings in China.

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. The Chinese government announced the suspension of Ant Financial’s listing in October last year.

The Financial Supervisory Service recently received a response from the People’s Bank of China, the Chinese supervisory authority, regarding whether Ant Financial has been sanctioned. However, the reply was ambiguous in email format, and consultations with the Financial Services Commission are ongoing.

A Financial Supervisory Service official explained, “We received a reply from China, but it was in email format and did not address the previously requested content. It is difficult to determine the legal sanction status of the Ant Group based on this alone, so we are consulting with the Financial Services Commission.”

Even if Kakao Pay does not pass the final review on the 27th, it is possible to hold a temporary meeting and obtain approval by the 4th of next month if documents are supplemented.

However, if approval is not obtained by the 4th, the situation becomes complicated. Kakao Pay must immediately stop providing similar MyData services it has been offering under the revised Credit Information Act starting February 5th. Since it will have to undergo another review at the final approval meeting held in February, a service gap of about a month is expected.

MyData is a service that collects and manages an individual’s credit information scattered across various financial companies and institutions in one place. If Kakao Pay fails the review, services such as integrated transaction inquiry, insurance inquiry, vehicle management, and financial reports are expected to be suspended.