South Korea’s government will shrink the period in which e-commerce marketplace platforms must settle up – from 60 days to 40 – to ensure that small sellers aren’t caught in a cash crunch.
The nation’s finance ministry announced the change on Wednesday, along with a requirement for platforms to manage funds from incoming purchases in ways that prevent e-commerce providers from extending the settlement deadline to improve their own liquidity.
Some e-commerce players, like Naver and G-Market, already do this by operating an escrow settlement system for sales proceeds, said the ministry.
The government also vowed more oversight on the industry and payment gateways.
The changes were announced in response to payment delinquency by e-commerce marketplaces WeMakePrice and TMON.
Last week, the government created a ₩560 billion ($445 million) bailout fund, designed to offer low-interest loans to merchants who have waited weeks to receive money for sales made on the two sites.
Local governments will pitch in an additional ₩600 billion ($435 million) in emergency management stabilization funds for vendors in their jurisdictions.
Another ₩60 billion ($43.5 million) of government money is available for travel agencies.
Both delinquent marketplaces are owned by Asian e-commerce pioneer Qoo10.
The companies stopped paying vendors in early July, citing a payment system glitch. As time rolled on and payments weren’t made, vendors first wore the cashflow crunch before protests began and the government stepped in.
On Wednesday, the finance ministry revealed that WeMakePrice and TMON still have not settled payments. Collectively, the amount of money owed totals ₩278 billion ($201 million). Seventy-nine percent of that covers merchandise and 21 percent in gift certificates.
An additional but less discussed ₩19.2 billion (13.8 million) from fellow Qoo10 property Interpark Commerce is also unsettled.
“So far, it is estimated that there are 3,395 sellers who have suffered from delayed settlement. The amount of damage to consumers related to general products is estimated to be at least six billion won, and it is likely to be further expanded if gift certificates and travel products are included,” revealed the ministry.
Seoul will start settling collective disputes and supporting civil suits for victims next week.
In 2022, Qoo10 was rated one of the “safe” e-commerce options by Singapore’s Inter-Ministry Committee on Scams (IMCS). ®
