The government will shorten the payment settlement period for e-commerce platforms, increase market supervision

The government will seek to shorten the settlement period for payments between e-commerce platforms and their suppliers and require companies to separately manage funds needed for payments to prevent a recurrence of the crisis involving Qoo10-owned trading platforms, the Ministry of Finance said on Wednesday.

These are part of the government’s follow-up actions in response to payment delays by TMON and WeMakePrice, which have also sought additional financial support of 600 billion won (435.57 million U.S. dollars) for local merchants who have suffered losses, according to a ministry statement.

Both e-commerce platforms filed for bankruptcy protection at the Seoul Bankruptcy Court late last month after failing to make payments to suppliers and refund customers due to cash flow problems caused by their owners’ aggressive merger deals.

Financial authorities suspect that there are unpaid bills worth more than 1 billion won and other liquidity problems related to the incident.

According to the plan, the government will seek to amend the Act on Fair Transactions of Large Retail Enterprises and raise the upper limit of the settlement period of e-commerce platforms for sellers to about 40 days.

Currently this period is set at a maximum of 60 days.

Sellers claim that more than two months of revenue is frozen due to the practice of settling payments after several months, and such payment system and improper regulations are being blamed for the incident.

The government has decided to require e-commerce platforms and payment gateways to set aside a certain portion of the money paid to sellers to prevent the money from being diverted for other purposes.

It will also develop measures to strengthen oversight of payment gateways.

The ministry said the details of the new regulations would be determined later, after consultations with industry representatives and experts.

In response to the incident, financial authorities announced the issuance of low-interest loans and the extension of repayments of existing loans and tax payments worth at least 560 billion won in total.

In addition, the local government will allocate 600 billion won to a crisis management stabilization fund for local suppliers that have suffered financial losses.

About 60 billion won will also be available to travel agencies, which have been particularly hard hit by payment delays.

The government will start collective dispute resolution procedures for victims next week and support them in possible civil lawsuits against the markets.

This week we will extend support to complete refunds for those who purchased merchandise other than travel packages and gift cards.

The government also pledged to strengthen cooperation with credit card companies, travel agencies and other relevant entities to help purchasers of travel packages, gift cards and other services return their money as soon as possible.

“The government will provide additional support to the victims of the WeMakePrice and TMON incidents and seek measures to prevent further damage,” Finance Minister Choi Sang-mok said during an economic ministers’ meeting in Seoul on Wednesday.

“This month we will establish the details of the changes to the law to be presented to the National Assembly,” he added.

Qoo10 was founded in 2010 and acquired TMON in 2022 and WeMakePrice last year. (Yonhap)