South Korean Government’s ‘Zero Pay (tentative name)’ system has been tied to a problem involving charging fees and it has become unclear whether it will be able to completely exempt small businesses that make less than $441,000 (500 million KRW) annually from fees.
Commercial banks are stating that it is difficult for them to completely exempt small businesses from charging fees since charged amount can be used for personal wire transfer and other tasks. As a result, South Korean Government has started preparing ways that will guarantee that charged amount is being used for Zero Pay.
According to Ministry of SMEs and Startups’ ‘Establishment and Operation of Zero Pay Platform’ obtained by The Electronic Times, Ministry of SMEs and Startups (MSS) is looking into new models that will resolve a problem involving charging fees.
South Korean Government is pushing for Zero Pay project to alleviate financial burden for small businesses. Its goal is to completely exempt small businesses from fees and levy less than 1% fees to other small businesses that make more than $441,000 (500 million KRW).
Zero Pay system moves (charge) money from a consumer’s account to an account of payment businesses such as KakaoPay and then it has a payment business cash in money into a small business. ‘Deposit fee’ that occurs when a payment businesses cashes in money into a small business has made significant progress. However a problem has occurred with ‘charging fee’ that occurs when money is charged into an account of a payment business from a consumer’s account.

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“We cannot completely exempt small businesses from charging fees since charged amount can be used for other tasks besides Zero Pay.” said a representative for a bank that is participating in Zero Pay project. “We need ways to track charged amount so that we can confirm that charged amount is used for Zero Pay.”
As a result, MSS, Seoul-si, and Korea Financial Telecommunications & Clearings Institute (KFTC) have started preparing ways to confirm tracking of charged amount. Seoul-si and KFTC are thinking about automatic charging method and tracking method through payment network respectively.
Seoul-si’s automatic charging method makes withdrawal from a consumer’s account possible only if payments take place through Zero Pay. On the other hand, KFTC’s is thinking about monitoring deposit and charging processes as a whole.
MSS, Seoul-si, and KFTC are planning to prepare a finalized model sometime during this month after discussing with commercial banks and payment businesses.
“We are currently discussing with commercial banks and payment businesses about ways to track flow of charged amount to minimize transfer fees.” said a representative for MSS and Seoul-si. “Since we are planning to implement Zero Pay project by end of this year, finalized model will be prepared by middle of this month at the latest.”
Staff Reporter Ham, Jihyun | goham@etnews.com