[Exclusive] 7 Major Open Markets Operate Own PG and Subsidiaries... "Separation Needed"

Kakao, 11st, Gmarket Auction, Lotte Shopping
Manage Sales Proceeds After Registering Own PG
Musinsa Also Manages Through Subsidiary Besides Coupang and Naver

Major online shopping platform companies have been found to either handle electronic payment gateway (PG) services internally or through subsidiaries. Since TMON and WEMAKEPRICE registered themselves as PG companies and operated funds through a system that directly settles sales proceeds, causing delays in settlements, financial authorities are also considering measures to separate these businesses.

According to the response materials related to the "Open Market Sales Proceeds Settlement Status Inspection Meeting" received by Rep. Lee Jung-moon of the Democratic Party from the Fair Trade Commission on the 9th, in addition to Coupang (Coupang Pay) and Naver (Naver Financial), which were known to manage sales proceeds through subsidiaries, Musinsa (Musinsa Payments) also manages sales proceeds through a subsidiary. Kakao, 11st, Gmarket·Auction, and Lotte Shopping manage sales proceeds by registering their own PG companies. Interpark Commerce, which participated in the meeting held on the 1st, recently changed its secondary PG company from TMON, a subsidiary of its parent company Qoo10 Group, to KG Inicis and Hecto Financial.

The settlement cycle was mostly around one week based on the purchase confirmation date. In the case of Kakao, sales proceeds are settled three business days after the purchase confirmation date. Lotte Shopping accumulates settlement deposits for sellers one business day after the purchase confirmation date. The amount accumulated as settlement deposits can be withdrawn by the seller at any time and is settled after one business day. Interpark Commerce settles based on the purchase confirmation date and allows withdrawals on a weekly basis.

For example, once a purchase is confirmed, the settlement amount is accumulated in the form of S-Money on the next business day, and withdrawal requests made from Saturday to Friday are collectively deposited to sellers on the following Monday. Musinsa settles sales proceeds on the 10th of the following month (or the next business day if it is a holiday) after the end of sales at the end of each month, based on the consumer's purchase confirmation date. If a purchase is confirmed on the 1st, the payment can be received on the 10th of the next month, which may take up to 40 days. Regarding this, Musinsa stated in a press release on the 2nd, "The average settlement cycle for tenant brands is 25 days (minimum 10 days)" and "There has never been a delay in the settlement of sales proceeds."

At the open market meeting held by the Fair Trade Commission on the 1st, there was reportedly no discussion about the outsourcing status of escrow services for e-commerce companies. TMON operates not only PG services but also escrow services, raising suspicions that funds deposited by its parent company, Qoo10 Group, may have been misappropriated. On the 30th of last month, during an urgent inquiry at the National Assembly's Political Affairs Committee, Qoo10 CEO Koo Young-bae admitted that part of the funds used for the acquisition of Wish, amounting to 40 billion KRW, included sales proceeds.

According to the registration and cancellation status of electronic financial businesses, among the companies participating in this meeting, those qualified for escrow services are Gmarket, Kakao, Lotte Shopping, Coupang, and 11st. Even if they hold escrow qualifications, it does not necessarily mean they have outsourced escrow services to themselves or their affiliates. However, if a company like TMON outsources escrow services to itself rather than a third party, there is concern that incidents like the TMON and WEMAKEPRICE cases could recur.

Financial authorities are considering separating e-commerce and PG businesses. This is to prevent TMON or WEMAKEPRICE from tapping into PG company funds when they face financial pressure. Options being discussed include separating PG companies as subsidiaries or using external PG providers. Financial authorities have identified that Amazon, the world's largest e-commerce company, outsources PG services to external companies, ensuring that funds do not enter Amazon internally.