TITLE: South Korea's Financial Services Commission Strengthens Payment Gateway Settlement Fund Protections Through Legislative Amendment
BODY:
On June 19, 2026, South Korea's Financial Services Commission (FSC) announced a legislative notice for amendments to the Electronic Financial Transactions Act Enforcement Decree and Supervisory Regulations. The amendments implement detailed provisions of the revised Electronic Financial Transactions Act, which takes effect on December 17, 2026, and aim to prevent recurrence of settlement fund disputes such as the Tmeef incident.
The amendments establish comprehensive protections for payment gateway (PG) settlement funds held by PG operators pending disbursement to merchants or refunds to users. PG operators must now manage settlement funds entirely through external mechanisms—trusts, deposits, or payment guarantee insurance—using the same methods applied to prepaid charge funds. The external management requirement phases in progressively: 60 percent in year one, 80 percent in year two, and 100 percent from year three onwards. Deposits must be held with banks or postal offices; trusts with trust companies including bank and insurance company subsidiaries; and payment guarantee insurance through guarantee insurers. When settlement funds are managed through trusts or direct investment of insured funds, operators must invest in safe instruments including government bonds, local government bonds, payment guarantee securities, and special bonds.
The amendments also raise capital requirements for large PG operators. For operators exceeding 30 billion Korean won in quarterly electronic financial transactions, minimum capital increases from 1 billion won to 2 billion won. Major shareholder changes now require approval or registration, with procedures mirroring existing electronic financial business licensing processes. Enhanced disclosure obligations require quarterly reporting on compliance with management guidance standards, separate management of prepaid funds, and settlement cycles. Large operators with annual electronic financial transactions exceeding 2 trillion won or electronic financial business revenue of 1 trillion won and total assets exceeding 500 billion won face additional disclosure requirements covering management policies and risk management.
The comment period runs from June 19, 2026 to July 29, 2026. Responses should be submitted to the FSC's Digital Finance Division at khy448@korea.kr or by post to Seoul Government Complex, Jongno-gu, Seoul.