Viva Republica requested financial authorities to come up with a decision on whether its ‘reward’ system is an act of fund-raising without permission. Financial authorities are planning to come up with a decision by end of this month on whether they are going to see rewards that do not provide cash refunds as type of an interest.
According to industries, Viva Republica requested an authoritative interpretation by Financial Services Commission (FSC) towards its new reward program.
Viva Republica wants clear stance on whether payment of Naver Pay points is considered as fund-raising without permission.
This is because an act of depositing certain amount and paying interests by a FinTech company can be seen as a type of fund-raising without permission. Based on current laws, an act or raising funds from unspecified number of people without receiving an approval or registering is considered as an act of ‘fund-raising without permission’.
Previously, Viva Republica was involved in a controversy surrounding its ‘moneyback’ system. Its ‘moneyback’ system provided ‘Toss Money’ that can be exchange into cash as compensation. However, it is not currently providing ‘moneyback’ system at the moment.
Viva Republica stated that it established ‘moneyback’ system based on FSC’s interpretation back in 2016 which stated that prepaid electronic payment method providers could also pay interests. However, definition of ‘payment of interest’ has become unclear as its interpretation in 2018 included ‘no payment of interest’ clause.
FSC’s stance is different however. It stated that its interpretation in 2016 was made to whether payment of interest was possible based on banking-related laws and its interpretation in 2018 was based on ‘an act of fund-raising without permission’.
“Because Viva Republica’s reward program only corresponds to fund-raising without permission, we believed that it did not needs to receive an approval in 2016.” said a representative for FSC. “However, an issue that Viva Republica requested an authoritative interpretation in 2018 corresponds to fund-raising without permission, it cannot be seen that our stance has changed.”
Financial authorities are planning to make a statement towards its recent interpretation by end of this month and its statement is expected to impact other businesses such as Coupang and Kakao Pay as well.
“Although we are waiting an authoritative interpretation from FSC, we have newly designed a new model resolve any issue of fund-raising without permission.” said a representative for Viva Republica.
Staff Reporter Ham, Jihyun | email@example.com