ED Digital coupon dispute

Financial authorities, shopping malls deserve flaks

A dispute is escalating over digital coupon company Mergeplus, which has yet to refund many users, mostly general customers and small businesses. The company runs Mergepoint, a service model which enables subscribers to prepay cash so they can purchase goods and services at a 20 percent discount at some 20,000 franchises of 200 enterprises nationwide.

For instance, if a customer pays 800,000 won ($686.69) into Mergepoint's app, they can make 1 million won worth of purchases at the contracted locations. Mergeplus began its business operations in January 2019, and has seen rapid growth, riding on the effect of “limitless 20 percent discounts.” Currently, the app has 1 million subscribers, with average monthly transactions reaching 30 billion won to 40 billion won and cumulative points amounting to 100 billion won.

The dispute was triggered when the company announced abruptly, Aug. 11, that it would reduce the number of participating businesses to 20 from the current 200. Hundreds of customers stormed Mergeplus headquarters in Yeongdeungpo District, southwestern Seoul, demanding refunds Friday afternoon.

The current law stipulates that any company must register with the Financial Supervisory Service (FSS) if it wants to issue digital coupons that can be used in more than two business categories. Yet, Mergeplus started the coupon business without being registered. The firm asked the FSS about its business feasibility, only to be rebuffed, so it abruptly suspended the use of Mergepoint in businesses other than food locations.

Many users are underprivileged people who purportedly subscribed to the company's service to save money by purchasing daily necessities at discounted prices. Mergeplus should abide by its pledge to refund the customers without fail.

Skepticism is growing over the Mergepoint business model regarding its sustainability in particular. The high discount of 20 percent cannot be maintained without being backed by equivalent profit models. The financial authorities said, “We never had the legal authority to supervise the company as it was not legally registered. It is actually impossible to expand supervision to unregistered companies.”

Yet, their explanation has failed to persuade the people. Despite their lack of supervisory authority, they should have notified the customers of the possible risks coupon services have. They should have checked and taken the needed steps over the past three years while the company expanded its business to the extent of having 1 million subscribers.

Major online shopping malls such as Tmon, Wemakeprice, 11st and Gmarket also cannot avoid criticism alongside financial firms Hana Members and KB Kookmin Card. They are claiming innocence by saying there were unaware of the firm's failure to win approval from the proper authorities. This is highly irresponsible as customers might have decided to use the Mergepoint service since it had partnerships with those leading shopping malls and financial firms.