China still obstructs KakaoPay's MyData business

A KakaoPay user makes a payment with his smartphone using a QR code in this file photo. Courtesy of KakaoPay

By Park Jae-hyuk

KakaoPay is still facing difficulties in its attempt to win a MyData license, as the Chinese authorities have yet to respond to a request from the financial authorities here to confirm whether or not the Korean fintech firm's second-largest shareholder, Alipay, is under any sanctions there.

The MyData business is regarded as a future growth engine for most financial firms here as its license enables them to receive their customers' credit information from conventional financial firms, so that customers can access all their financial data in one place.

KakaoPay's rivals in the fintech industry, such as Naver Financial, Viva Republica and Banksalad, already won MyData licenses earlier this year, when the Financial Services Commission (FSC) gave final approval to 28 companies.

Hana Financial Group's four subsidiaries ― Finnq, Hana Financial Investment, Hana Bank and Hana Card ― whose review procedures had been halted over a criminal suit involving their largest shareholder, have also been able to get a review for their approval since last Wednesday.

“There have been no follow-up procedures for the criminal suit involving their largest shareholder over the past four years,” an FSC official said. “It has been difficult to predict when the suit will end, considering the procedures of criminal suits.”

The FSC also plans to receive additional applications for the license within this month. In addition, Naver Financial is set to be a step ahead of its rival KakaoPay with its small deferred payment services, which allow users to make deferred payments of up to 300,000 won ($270).

KakaoPay has no choice at the moment but to wait until the Chinese authorities give a response. The mobile payment unit of Kakao had applied for preliminary approval for a MyData license last December, but it could not win it for its failure to submit the required documents.

After the company was forced to stop providing some of its services regarding asset management in February, KakaoPay CEO Ryu Young-joon even complained of the financial regulator's measures in a recent interview with a local newspaper.

He reportedly called for the FSC to come up with alternative ways to check punitive actions and sanctions against its foreign shareholder, rather than depending only on responses from the financial authorities there.

However, the FSC has reiterated its previous stance that it is trying its best to receive relevant documents from the Chinese authorities.