“Growing Calls for Regulation and Supervision of Buy Now, Pay Later (BNPL) Services in South Korea”

[대한뉴스=김종필 기자] There are growing calls for strengthening supervision and discussing regulations on the BNPL (Buy Now, Pay Later) service, in which goods are purchased in advance and payment is made later.

According to data submitted by Rep. Choi Seung-jae of the National Assembly’s Political Affairs Committee on the 29th through the Financial Supervisory Service from three companies (Naver Financial, Kakao Pay, and Viva Republica (Toss)) that provide BNPL services, The delinquency amount and delinquency rate are increasing significantly every month, and in the case of some companies, the delinquency rate reached 5% as of last March.

BNPL, pre-purchase and deferred payment is a service in which the company pays the merchant first when purchasing a product, and the consumer can repay the company several times after receiving the product.

It seems no different from a credit card that provides an installment function in that the payment is paid in installments. It differs from credit cards in that most of them do not have installment fees.

As it is a new type of service, the Financial Services Commission designated it as an innovative financial service from 2021 and allowed companies such as Naver Financial, Kakao Pay, and Viva Republica (Toss) to carry out the business. Month, Kakao has been providing the service since January 2022, and Toss has been providing the service since March 2022.

Initially, at the time of service implementation, the amount of usage was limited to 300,000 won per month in consideration of problems such as overdue due to the characteristics of major users. However, despite the small amount, the cumulative number of subscribers of the three companies as of March 23, 2023 was 2,663,557, and the total amount of receivables was 44.5 billion won. usage is increasing rapidly.

The problem is that the delinquency rate is sharply increasing as the number of users exploded in a short period of time after the project was implemented. Excluding Kakao Pay, which is less used among the three companies, in the case of Naver Financial, the delinquency rate, which was 1.26% in March 2022, more than doubled to 2.7% as of March 23, 2023, a year later. During the same period, overdue bonds increased significantly from KRW 96 million to KRW 330 million.

In the case of Toss (Viva Republica), it is even more serious. As a result of aggressively increasing the number of users, it secured 2 million users, accounting for the largest portion among the three companies, but the amount of receivables increased to 32 billion won in about a year after the start of the service in March 2022, of which overdue receivables accounted for about 1.6 billion, with a delinquency rate of 5%.

In general, credit cards have a delinquency rate of 1% and are subject to various regulations such as card commission rates and loan loss provisions, but BNPL lacks such a regulatory system under the name of innovative finance, Choi explained.

In particular, even if the usage limit per company is 300,000 won, the limit can be further increased if each company uses overlapping usage. It is a situation that requires urgent discussion in that it can be.

Rep. Choi Seung-jae said, “More than a year has passed since the introduction of the deferred payment loan service as an innovative finance, and the cumulative number of subscribers seemed to be well received, reaching 3 million, but the delinquency rate is also increasing significantly.” Even taking into account the financial conditions and bond sales restrictions, there is a need to strengthen management and supervision and discuss the regulatory system with an awareness of the situation where the number of delinquent bonds, which was only a few million won, increases in a short period of time and the delinquency rate reaches 5%.” .

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