"No Refund?"... Card Companies Hit by Tmon and Wemakeprice Incident [1mm Financial Talk]

Card Company Payment Cancellation, Practically Impossible for Lump-Sum Payments
"Not Allowed in Principle... May Consider If Situation Worsens"

The unsettled payment crisis involving TMON and WEMAKEPRICE is spreading beyond the affiliated vendors to the credit card industry. As the 'non-refundable refund crisis,' where consumers cannot get their payment amounts back, becomes a reality, credit card companies are also being asked to cancel payments.

According to the financial sector on the 25th, the electronic payment gateway (PG) industry recently suspended transactions with TMON and WEMAKEPRICE. This means that not only purchasing products with credit cards but also refunds of already paid amounts are impossible. The surge in payment cancellations on e-commerce platforms like TMON and WEMAKEPRICE has caused cancellation amounts to increase beyond manageable levels.

Consequently, complaints related to the TMON and WEMAKEPRICE situation received by credit card companies are also increasing. As consumers become anxious due to the inability to contact PG companies or sellers, they request payment cancellations from credit card companies. However, since credit card companies do not have direct contractual relationships with Qoo10, the parent company of TMON and WEMAKEPRICE, they cannot request payment cancellations from Qoo10. According to merchant agreement terms, credit card companies cannot arbitrarily cancel payments without the consent of PG companies such as KG Inicis, Toss Payments, and NHN KCP, which have contracts with the merchants.

A credit card industry official said, "PG companies appear to be refusing to agree to payment cancellations because they have not received proper settlements from TMON and WEMAKEPRICE." He added, "Although complaints requesting refunds to credit card companies are coming in, such actions are practically impossible according to the rules. However, if the situation worsens, there is a possibility that credit card companies might first cancel payments to reduce customer damage and later exercise subrogation rights against the PG companies."

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@

Consumers who paid in installments are in a relatively better situation. If they exercise their installment withdrawal rights or defense rights with the credit card company, they are relieved of the obligation to pay the remaining installment amount. Installment withdrawal rights and defense rights refer to consumer rights to cancel payments or refuse to pay the remaining installment balance for goods or services purchased on installments. These rights can be exercised if defects occur in the purchased goods or if the agreed services are not provided. They apply when the transaction amount is 200,000 KRW or more and the installment period is three months or longer.

If a large number of installment withdrawal rights and defense rights are accepted in this crisis, the burden on the credit card industry is expected to increase. Credit card companies can claim subrogation rights against PG companies to recover losses, but PG companies must receive payments from TMON and WEMAKEPRICE to pay the credit card companies. The repayment possibility of TMON and WEMAKEPRICE, which are on the brink of bankruptcy, is currently uncertain.

A credit card industry official explained, "If TMON and WEMAKEPRICE customers exercise installment withdrawal rights or defense rights, credit card companies will first refund the payment amount and treat it as an outstanding receivable. They can later recover the amount from the PG companies. They have also prepared by setting collateral in advance." He added, "However, if the situation prolongs, credit card companies may face losses (such as financial costs) in the worst case."