November 21, 2024

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A dedicated help desk for victims of the WeMakePrice and Tmon payment delay crisis is set up at the Financial Supervisory Service's Financial Support Center in Yeouido, Seoul. (Yonhap)

The Korean government announced on Wednesday a policy support package totaling 1.2 trillion won ($871 million) to address damage from Tmon and WeMakePrice payment delays, with refunds for general products to be completed within the week.

The measures, part of a follow-up support plan announced by the Finance Ministry, include an additional 600 billion won in emergency funds for vendors impacted by the delays, supplementing the 560 billion won announced last week. These additional funds will be sourced from local governments, the ministry said.

Starting that day, businesses affected by settlement delays can extend the maturity of existing loans and guarantees by up to one year. Additionally, the government will begin accepting applications for some of the financial support programs on Friday.

Financial authorities estimate overdue settlements totaled 278.3 billion won as of Aug. 1, with the figure expected to rise to nearly 1 trillion won. About 3,400 vendors have been affected, with roughly 80 percent owed less than 10 million won each.

For consumers, the government pledged to complete refunds totaling 6 billion won for general product purchases -- excluding travel packages and gift cards -- by the end of the week.

Next week, financial authorities will initiate collective dispute settlement procedures for victims in the travel sector, with applications accepted until Friday. As of Monday, 5,360 cases have been filed with the Korea Consumer Agency by consumers seeking collective dispute settlements over travel package purchases.

According to the Financial Supervisory Service, around 133,000 consumer refund requests have been received, totaling 59.4 billion won in damages.

The recent payment delays at Tmon and WeMakePrice exposed gaps in the regulation of e-commerce platforms operating payment gateways, and the government on Wednesday unveiled plans for regulatory improvements to prevent similar crises.

Key measures include legally restricting the time e-commerce platforms and payment gateways can delay vendor settlements and requiring that sales proceed management be entrusted to a third party.

While large retail businesses must complete settlements within 40 to 60 days, this regulation does not currently apply to e-commerce platforms. The authorities intend to impose a similar rule for online marketplaces and payment gateways but with a shorter time frame.

The government will finalize the details of these new regulations by the end of the month, following consultations with industry officials and experts, and will aim to submit the necessary amendments to the National Assembly shortly thereafter.

The liquidity crisis at Tmon and WeMakePrice began when they failed to disburse payments owed to sellers as early as May. This led to seller departures, causing delivery and refund failures for customers and bringing the issue to public attention.

Local investigators are examining the case, suspecting that Qoo10, the Singapore-based owner of the marketplaces, made unauthorized use of the subsidiaries' funds, including acquiring the US online shopping platform Wish in February. This alleged misuse of funds is believed to have caused the liquidity crunch leading to the payment failures.

The cash-strapped shopping platforms are currently undergoing an autonomous restructuring support program until Sept. 2, during which they will seek voluntary negotiations with their creditors to reschedule payments. If negotiations fail, the court will restart the process to determine whether to place the companies under court-led debt restructuring.

By Choi Ji-won (jwc@heraldcorp.com)