Online payments crisis shows vulnerability in Seoul

Significance

E-commerce is a major sector, with a few domestic players dominating the market. The government’s monetary aid to the platforms’ unpaid vendors aims to mitigate financial contagion risks, which have been spurred by elevated household debt and small and medium-sized enterprises (SMEs)’ lacklustre finances.

Impacts

• A property market recovery may further delay BOK aims to cut interest rates soon, amid fears over raising indebtedness.
• As in the July 23 arrest of Kakao founder Kim Beom-su for alleged share price manipulation, corporate malpractice is again in the spotlight.
• Local e-commerce majors, notably Coupang and Naver, are benefitting; customers now deem them safer while shunning smaller competitors.