Republic of Korea: Announced FSC proposal for new regulations for payment gateway (PG) services

On 9 September 2024, the Korean Financial Services Commission (FSC) announced a proposal for new regulations for payment gateway (PG) services aimed at preventing the recurrence of payment delays. The regulations aim to address recent e-commerce payment failures and prevent future delays. The proposed measures include stricter management of unsettled payments, requiring PG services to manage 100% of unsettled funds separately as deposits, trusts, or through payment guarantee insurance. This requirement will be phased in over three years, starting with 60% in the first year, 80% in the second, and 100% in the third. These funds must not be used as collateral, transferred, or seized, and PG services will need to disclose these arrangements to sellers and on their websites. Furthermore, a priority right to payments will be introduced to protect funds if a PG service goes bankrupt. In addition, new supervisory tools such as corrective orders, business suspensions, and registration revocations will be introduced to enforce compliance with operational guidelines and separate management requirements. PG services may face penalties if they misuse separately managed funds or fail to meet settlement deadlines. The FSC will hold public discussions on these proposals in September before finalising the plan for submission to the National Assembly.