'Timon and Wemakeprice Crisis Strikes Like a Bolt from the Blue... Travel Agencies Also Facing Closure'

Unpaid Amounts Estimated at Tens to Hundreds of Billions KRW by Major Travel Agencies
Certified Letters Sent Urging Payment of Overdue Fees
Losses Absorbed While Proceeding with Some Reservations
Consumer Complaints Flood In, Double Hardship... Small Companies Face Risk of Bankruptcy

Outbound travel agencies specializing in overseas trips for domestic travelers have been hit hard by delayed seller settlements on TMON and WEMAKEPRICE, subsidiaries of Qoo10, a Singapore-based e-commerce platform. Targeting the third quarter, which includes summer vacations, school breaks, and the Chuseok holiday, many products were sold through these platforms, but losses have become inevitable as payments have not been collected.

With TMON and WEMAKEPRICE remaining silent, consumers whose travel plans have been disrupted are flooding travel agencies with complaints, causing double hardships. There are concerns that if this situation prolongs, it could lead to a chain of bankruptcies, especially among small travel businesses.

According to industry sources on the 25th, major travel agencies such as Hanatour, Modetour, Norangpungseon, and Kyowon Tour have temporarily suspended sales of travel products on TMON and WEMAKEPRICE since the 22nd. They have sent certified letters demanding payment of overdue amounts or notification of settlement deadlines from these platforms. For customers who purchased products and have imminent departure dates within this month, the agencies plan to absorb losses and proceed with the scheduled itineraries.

Although there are differences among companies, customers who purchased products with departure dates next week or after August are being asked to cancel payments made through the platforms and rebook through the travel agencies. However, refunds via TMON and WEMAKEPRICE are difficult, and even if requests are accepted, it is unclear when the money will be received. Additionally, many reservations were made through discount promotions on these platforms, leading to strong consumer backlash against rebooking at regular prices.

Some have suggested canceling payments through credit card companies, but according to the Specialized Credit Finance Business Act, credit card companies can only approve cancellations with the consent of the electronic payment gateway (PG) companies that handle e-commerce payment services. PG companies have blocked both cancellations of existing payments and new payments as cancellation amounts have exceeded settlement funds due to a flood of cancellation requests from TMON and WEMAKEPRICE. Currently, it is difficult for consumers to get refunds for amounts already paid.

The settlement delay issue that started at Wemakeprice, an online shopping mall operated by Qoo10 Group headquartered in Singapore, is spreading to TMON. On the 24th, citizens are passing by the TMON building in Gangnam-gu, Seoul. Photo by Jo Yongjun jun21@

Travel agencies have traditionally received payments for products sold on these platforms about mid-month following the sales month. Originally, WEMAKEPRICE was supposed to complete settlements for June sales by mid-July, and TMON’s final settlement deadline was the 22nd, but neither company met these deadlines. Since this period coincides with the third quarter, considered peak season in the travel industry, it is expected that outstanding payments per travel agency could range from several billion won to over 10 billion won.

An industry insider said, "Most travel agencies have already paid advances from company funds to secure airline seats, local accommodations, and vehicles in consideration of the peak season. Larger companies may have some capacity to endure, but there is a strong sense of crisis that small travel agencies will go bankrupt if payment settlements are delayed."

On the 23rd, TMON and WEMAKEPRICE announced plans to introduce an escrow-based settlement system linked with a third-party financial institution next month to minimize seller attrition. Previously, when customers made payments, each platform held the funds and paid sellers on their respective settlement dates. Going forward, funds will be held securely by a third-party financial institution and paid immediately to sellers as soon as customers confirm their purchases, operating a faster settlement system.

Travel agencies are also expressing frustration about this. An industry representative pointed out, "The situation is urgent, but changing the settlement system without any explanation or official statement regarding payment demands?can that really be a solution?" Travel agencies are discussing follow-up measures, including legal action, through their in-house legal teams. They plan to issue additional statements after monitoring TMON and WEMAKEPRICE’s moves.