Mobile remittance allowed for foreign currency

By Yoon Ja-young

Mobile phone users will be able to transfer money overseas via mobile applications such as Kakao Talk. The government expects remittance fees to be slashed as not only banks but also fintech companies, insurers and securities companies will be allowed to offer foreign exchange services.

The Ministry of Strategy and Finance said that revisions for the Foreign Exchange Act was approved at a cabinet meeting Tuesday, and will be implemented immediately.

Most notable among the revisions was the deregulation for small-sum foreign exchange transfers.

Previously, only banks were allowed to offer foreign exchange remittance services. Following the revision, fintech companies as well as non-bank financial companies such as brokerages, insurers, and asset management companies can offer the service. A person can remit up to $20,000 a year through these service providers.

“Currently, banks charge fees between 30,000 won and 40,000 won for remitting 1 million won. Increasing competition in the market will likely lessen the fees as well as decrease remittances through illegal channels,” the ministry said in a press release.

The businesses wishing to be engaged in foreign exchange remittance services should have at least 300 million won in capital. The government explained that it lowered the capital requirement to 300 million won from 1 billion won to open doors for small players in the fintech industry.

Around 2 million people are expected to benefit from lower remittance fees when considering that there are 1.8 million foreigners in Korea and 220,000 Koreans studying abroad.

The government also adopted the negative system in foreign exchange regulation instead of the positive system. Previously, non-bank financial companies could offer foreign exchange services only listed in related regulations, but now they can offer any service unless it is listed as banned.

By expanding foreign exchange services that non-bank financial companies can offer, the government expects that local players will have more opportunities to advance into overseas markets as well as globalizing their financial services.