Nice Information & Communication Provides Illegal Rebates
The Financial Supervisory Service (FSS) has detected suspicions that Kakao Pay received illegal support funds worth several hundred million won from Nice Information & Telecommunication, the top value-added network (VAN) operator, and has requested a police investigation.
According to the financial sector on the 4th, the FSS recently uncovered during a spot inspection that Kakao Pay allegedly received illegal support funds through indirect merchant support from Nice Information & Telecommunication, and requested a related investigation from the police last month.
It was confirmed during the FSS inspection that Nice Information & Telecommunication, the agency, paid the agency fees that Kakao Pay was supposed to pay to offline payment merchant recruiters. It is understood that during two promotional campaigns in 2021 and 2022, Nice Information & Telecommunication paid several hundred million won on behalf of Kakao Pay.
According to the Specialized Credit Finance Business Act, large credit card merchants such as Kakao Pay must not unjustly demand or receive compensation from VAN companies for using credit card value-added communication services. VAN companies are also prohibited from providing unjust compensation to large credit card merchants.
The FSS viewed that Nice Information & Telecommunication indirectly provided compensation to maintain the VAN transaction relationship with Kakao Pay. In fact, Nice Information & Telecommunication is reported to mediate most credit card payments through Kakao Pay online.
The FSS stated, "Violations of the Specialized Credit Finance Business Act are subject to criminal penalties, not administrative sanctions," and added, "We requested a police investigation, and we understand that the police have conducted a search and seizure at Kakao Pay’s headquarters in connection with this matter." In fact, the police conducted a search and seizure at Kakao Pay’s headquarters the day before and secured materials related to the recruitment and management of payment service merchants.
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