Tmon, WeMakePrice payments delayed to W1.3tr – The Korea Herald view

Protesters affected by the liquidity crisis at e-commerce platforms Tmon and WeMakePrice gather outside the Financial Supervisory Service headquarters in Yeouido, western Seoul, on Sunday. (Yonhap)

Merchant settlement arrears on e-commerce platforms Tmon and WeMakePrice have collectively risen to 1.3 trillion won ($978 million), affecting more than 48,000 companies, according to government data released on Sunday.

The final figures showed that two struggling online marketplaces owned by Singaporean Qoo10 owe a combined 1.3 trillion won to their suppliers, exceeding the government’s initial forecast of 1 trillion won. The figure also represents an increase of more than 400 billion won from the initial 818.8 billion won on Aug. 19.

The liquidity crisis has hit 48,124 companies on the platforms. While 43,493 suppliers are owed less than 10 million won, 981 suppliers are owed more than 100 million won, accounting for 88.1 percent of the total outstanding payment amount.

The largest percentage (29%) of late payments are for digital and household appliances, 25.2% for gift cards, 10% for food products, 8.8% for consumer goods and cultural services, 6.3% for fashion goods and 6.2% for travel-related products.

While most of the affected suppliers were located in South Korea, especially in the Seoul metropolitan area, 772 suppliers were based overseas. Delayed payments to overseas suppliers amounted to 6.6 billion won.

At an intergovernmental meeting on Friday, relevant authorities pledged to immediately implement a budget of 1.6 trillion won that was drawn up to support affected suppliers.

Of the 1.6 trillion won, about 35 billion won had been executed as of Wednesday, the announcement said. The government will also consider lowering interest rates on loans to ease the burden on traders.

To prevent similar incidents, the government has pledged to examine regulations relating to the e-commerce industry, amending the Fair Transactions in Large Retail Act and the Electronic Financial Transactions Act.

Key measures under consideration include enforcing shorter settlement periods than the current 40 to 60 days for large retailers and requiring them to manage supplier settlement amounts separately. A final plan is due to be announced by the end of the month.

Meanwhile, Tmon announced on Friday that it had reorganized the company, establishing a financial management division and expanding its legal team to strengthen regulatory compliance.

Tmon said it would incorporate escrow functionality into its existing payment system, which would allow a third party to temporarily hold money until a transaction is successfully completed. The settlement period would also be shortened, to no more than three days.

“We are considering various ways to normalize the company, such as attracting investment and securing assets,” said Tmon CEO Ryu Kwang-jin. “Through the reorganization, we will work to regain trust and establish a foothold for long-term growth.”

On Friday, a court approved Interpark Commerce, another e-commerce subsidiary of troubled Qoo10, to conduct a standalone debt restructuring program, following in the footsteps of Tmon and WeMakePrice.

“We are focused on minimizing the number of affected suppliers and the extent of the damage,” said Interpark Commerce CEO Kim Dong-sik. “The (Interpark Commerce) sale process is ongoing and we will make every effort to achieve a better outcome.”

Under the debt restructuring procedure, platforms can negotiate debt repayment with sellers for a month before being placed under judicial management.