Research Report
A Study of Legal Countermeasures due to Change in the Retail Payment Market
Ⅰ. Backgrounds and Purposes
○ Recently, with the emergence of various technologies and services in the Digital Finance, payment methods have been changed too.
○ Convenience and options of consumer are expanding continuously by the emergence of unmanned convenience stores that are automatically calculated through pre-registered payment methods, various simple payments made through mobile card registration without a real credit card, and payments made by prepaid recharge on various online shopping platforms.
○ The retail payment market is changing at a rapid pace with the development of the internet network and e-commerce using mobile devices becoming commonplace, and the use of payment methods as simple payment and simple remittance
- While non-face-to-face transactions have rapidly increased due to the recent Covid-19, various payment methods based on online platforms or APPs have appeared and new types of FinTech services or financial instruments have been launched as payment platforms have become larger also.
- With the emergence of new types of payment methods and diversification of payment methods, effective management may be difficult only by applying the current legislations.
- More than 30% of global FinTech is concentrated in the financial payment industry, and major global FinTech companies such as PayPal, Alibaba, and Revolute are also growing into financial platforms based on financial payment, and a technology-based BigTech company with market dominance is also expanding into the financial sector.
○ In line with the changes in the retail payment market, the Financial Services Commission is promoting various policies for innovation in the field of digital finance, and actively promoting discussions on revisions to the Electronic Financial Transactions, enforcement ordinances, and supervisory regulations for the smooth implementation of these policies.
- On February 25, 2019, in order to recognize the changes in the payment services and to activate the FinTech and financial platform, 「The Financial Payment and Settlement Infrastructure Innovation Plan」 was disclosed jointly with relevant ministries.
- On July 26, 2020, the Financial Services Commission announced the 「Comprehensive Digital Finance Innovation Plan」 and decided to introduce a small license system, a comprehensive payment settlement business, and a payment order settlement business, and also revealed the direction of the revision of the Financial Transactions Act.
- It is predicted to introduce various regulations such as measures to strengthen user(consumer) protection and offshore application to Big-Tech companies as Jurisdiction in the direction of the draft of the Electronic Financial Transactions Act Revision by the Financial Services Commission,
Ⅱ. Main contents
▶ In this study, the legal countermeasures related payment services have been sought and current status of the retail payment market and the diversification of retail payment means too.
○ It is based on the government's policy promotion direction according to the recent changes in the retail payment market, measures to respond to laws related to retail payment from a balanced perspective that consider the soundness of the financial payment industry and the user's convenience and user(consumer) protection of retail payment services to the maximum.
- First, by clarifying the concept of retail payment , it is necessary to determine the scope of the analysis of the legal system and the target of the legal system.
- In each chapter, there is a change in the domestic retail payment market and the development of a fair transaction environment in the process of the government's financial payment innovation plan accordingly, financial stability and soundness, which must be judged major in the payment and settlement field, and simple payment based on ICT and improvement measures and legislation regarding security and safety issues in the field of online and mobile payments, evaluation of the final consumer benefits of technologically innovative financial services and products with a focus on enhancing user convenience and innovation, protecting users and financial consumers, and raising their status, etc.
▶ International institutes related finance market and consumer protection or each countries are also preemptively reorganizing related laws and systems to keep pace with changes in the payment and settlement market due to the expansion and development of the digital economy.
○ The EU's 「The revised Payment Services Directive (PSD2)」, which has been in effect since 2018, has various effects on EU members, non-members, and evenly Asian countries also reorganize Payment Serveice laws.
- In accordance with the PSD2 of the EU, the 「Payment Services Regulations 2017」 in the UK was legislated as a domestic law.
- Meanwhile, the PSD2 of the EU has a wide range of influences on other European countries other than EU member states.
- In addition, in Singapore, through the enactment of the 「Payment Services Acts」 in 2019, the basis for the legal relationship between payment service providers and users has been established.
- Japan's “Funds and Settlement Act” has been revised several times since 2010, expanding the scope of payment and settlement, and in China, securing efficiency and securing efficiency by implementing various regulations on payment and settlement related to internet finance. There is a movement to strengthen the protection of user funds received.
- In Israel, the Payment Service Act was enacted in 2019 and has been in force since 2020, and the protection of users of payment services has been established by relevant regulations regarding the law on payment services contracts and unauthorized transactions with payment methods.
▶ Various legislative improvement measures should be prepared to protect users of retail payment services by reflecting the characteristics of the retail payment market.
○ When the Electronic Financial Transactions Act is revised in relation to user(consumer) protection due to changes in the retail payment market, the disadvantage of users in terms of access to information and bargaining power is supplemented by reflecting the characteristics of the retail payment market, which functions as a platform as a multisided market (MSP multisided market). Legislative considerations that can be done.
○ In 2014, the 「OECD Consumer Policy Guidance on Mobile and Online Payments」 provides a variety of payment service providers to users who use online platform or APP-based payment services. Since the duty of caution and the duty to take action are prescribed, legislative consideration at the level to comply with them is required.
▶ The current Electronic Financial Transactions Act considers a financial company or an electronic financial business operator as a payment service provider that conducts electronic payment transactions, but it should be improved the structural problem of not having the status of the regulation for each parties of payment service as provider, user, the third parties, etc., but the business regulation for providers.
○In the Electronic Financial Transactions Act, the legal relationship between providers and users of payment services is centered on the elements of the transaction relationship reflecting the multi-layered structure of payment and settlement, and the elements of financial transactions are defined to secure market trust and strengthen user protection. Must be configured
○ Regulations dealing with entry restrictions for payment service providers are established separately from the payment transaction act, and the Payment and Settlement Transaction Act requires systematization in a way that regulates user(consumer) protection while stipulating the legal relationship between payment settlement companies and users.
○ Regarding user protection, provisions that stipulate specific rights relations in relation to risk-bearing, such as the scope of liability between the parties and the conversion of the burden of proof, the schedule of compensation for damages, and priority compensation measures, should be explicitly adopted.
-It is necessary to clarify the boundaries between the scope of unauthorized transactions and fraudulent activities, and introduce measures to protect users against unauthorized transactions and duplicate/multiple payments.
- Monitoring of payments for children, supervision of unfair display and advertising activities, relief for automatic payments such as automatic repurchase contracts, clear notification of options and additional costs for cross-border transactions, and prior information on the possibility of unexpected costs Obligations such as provision should also be considered.
- It is also necessary to prepare a dispute settlement system and damage relief procedure, and to consider introducing the appearance/guarantee responsibility of large platform retail payment operators as Big Tech with prior notice and market dominant status on the procedure.
○ On the other hand, the 「Consumer Basic Act」, 「Terms and Conditions Regulation Act」, 「Consumer Protection Act in Electronic Commerce, etc.」, 「Contents Industry Promotion Act」, 「Information and Communication Network Utilization Promotion and Information Protection Act」, 「Installation Payment In each related legal system such as the transactions laws, it is necessary to supplement the matters related to retail payment services and to prepare guidelines and standards for strengthening the protection of each user(consumer).
Ⅲ. Conclusion
○ In consideration of the virtuous cycle of the development of the digital finance industry and strengthening the competitiveness, the stability, security, convenience, and financial stability of the financial industry and protection of financial consumers, it is necessary to prepare legislation measures to respond to the changes in the retail payment market.
○ Furthermore, it is necessary to establish a regulatory feedback system for the rapidly changing retail payment market through regulatory reform and user(consumer) protection and financial security issues.