KakaoPay Faces Asset Management Service Suspension Crisis: "Please Allow Temporary Operation"

Denied MyData Business License
Concerns Over Inconvenience for 15 Million Existing Users

[Asia Economy Reporter Kiho Sung] Kakao Pay is facing the risk of suspending its asset management service used by 15 million people starting from the 5th of next month. This is because it failed to obtain the Financial Services Commission's MyData business (personal credit information management) license. Kakao Pay is unable to hide its embarrassment as the approval has been indefinitely delayed. Additionally, it is requesting to continue the existing service due to concerns about potential harm to numerous consumers.

According to the financial sector on the 28th, the Financial Services Commission held a regular meeting the previous day and granted MyData business licenses to all 28 companies under the final approval review. These include five banks?Kookmin, NongHyup, Shinhan, Woori, and SC First Bank?14 fintech companies such as Naver Financial and Viva Republica (Toss), and nine other companies including Kookmin Card and Mirae Asset Daewoo.

On the other hand, Kakao Pay faced a setback. The company did not even receive a preliminary license because the major shareholder, China's Ant Group (Alipay), had no confirmed record of sanctions.

The MyData business license review considers various factors such as capital, security systems, business plans, and expertise. The issue was the 'major shareholder eligibility.' According to regulations, if a shareholder holding 10% or more of voting rights (major shareholder) has been sanctioned or is under litigation, the review is suspended. The Financial Supervisory Service inquired with the People's Bank of China whether Ant Group, Kakao Pay's second-largest shareholder, had any sanction records locally. However, the People's Bank of China did not provide a clear response.

Kakao Pay expressed that it never imagined the ambiguous answer from the People's Bank of China would affect the review. Kakao and Ant Group are preparing countermeasures through major law firms in Korea and China but have yet to find a solution.

A Kakao Pay official explained, "Ant Group is not a company directly engaged in financial business. Therefore, it is not under the jurisdiction of the People's Bank of China," adding, "The People's Bank of China discloses all sanction details on its website, but there was no information related to Ant Group." However, financial authorities maintain that they must receive a definitive answer from the People's Bank of China to resume the review.

Industry insiders point out that Kakao Pay can practically do nothing regarding the MyData business. Naver Financial faced concerns about a possible suspension of its license review when its major shareholder, Mirae Asset Daewoo, was recently investigated by prosecutors for violating foreign exchange laws. However, Mirae Asset Daewoo announced it would reduce its voting shares in Naver Financial to 9.5% by converting some common shares into non-voting convertible preferred shares, and the financial authorities accepted this, allowing the company to secure the business license. In contrast, Ant Group is currently in internal turmoil due to pressure from Chinese authorities, making it difficult to adjust its shareholding ratio.

Kakao Pay is requesting to maintain existing services due to concerns about consumer harm. A Kakao Pay representative stated, "The review issue is due to the major shareholder problem, and it should be considered a pending status, not a rejection," adding, "Since the damage would fall on consumers, we ask to allow the continuation of existing services." However, if the Financial Services Commission decides to suspend the service, Kakao Pay plans to seek alternatives such as partnering with licensed MyData companies to continue the business.

Kakao Pay is already providing similar services using MyData. Through its asset management service, users can view transaction details such as deposits and withdrawals, loans from multiple banks, and card usage history all at once.