Securities Companies Start Payment & Settlement Services
By Yoon Ja-young
Staff Reporter
From Tuesday, people will be able transfer money or pay utilities fees through their cash management account (CMA) at securities companies. Previously, bank accounts linked to CMAs were required, as securities companies weren't allowed to provide payment or settlement services.
The Korea Financial Investment Association said Monday that 13 securities companies would start payment and settlement services from Tuesday. They are Daewoo, Goodmorning Shinhan, Hana Daetoo, Hanwha, Hi, HMC, Hyundai, Korea Investment & Securities, Meritz, Mirae Asset, Samsung, SK, and Woori. Tong Yang Securities, meanwhile, has been providing such services since last month.
``With the launch of the services, investors will be able to use CMAs more conveniently, and the financial investment companies will be able to bolster their competitive edge by developing diverse products, being engaged in constructive competition with banks,'' said Korea Financial Investment Association chairman Hwang Kun-ho.
The measure constitutes a leap forward in the country's implementation of the Capital Market Consolidation Act, which aims at enhancing the competitiveness of the country's financial businesses by demolishing walls within the industry.
It allows the securities companies to provide the ``banking services'' that have been monopolized by banks. With banks monopolizing payment and settlement services, bank accounts were indispensable for most financial transactions. Account holders received salary, paid credit card bills and utilities, and transferred money through their accounts. One also needed a bank account linked to the securities companies' account to make deposits or withdraw money. Enjoying the privilege, banks have been reluctant about the government plan to allow securities companies to provide such services, but the measure has finally come to be realized.
Securities companies are launching aggressive marketing campaigns. Some of the companies are exempting the customers from ATM fees, and others are providing as much as a 4 percent interest on accounts, much higher than the below 0.3 percent rates that banks provide.