South Korea to force e-commerce marketplaces to pay vendors faster
- Reference: 1723010286
- News link: https://www.theregister.co.uk/2024/08/07/korea_ecommerce_payment_policy/
- Source link:
The nation's finance ministry announced the change on Wednesday, along with a requirement for platforms to manage funds from incoming purchases in ways that prevent e-commerce providers from extending the settlement deadline to improve their own liquidity.
Some e-commerce players, like Naver and G-Market, already do this by operating an escrow settlement system for sales proceeds, said the ministry.
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The government also vowed more oversight on the industry and payment gateways.
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The changes were [4]announced in response to payment delinquency by e-commerce marketplaces WeMakePrice and TMON.
Last week, the government [5]created a ₩560 billion ($445 million) bailout fund, designed to offer low-interest loans to merchants who have waited weeks to receive money for sales made on the two sites.
[6]
Local governments will pitch in an additional ₩600 billion ($435 million) in emergency management stabilization funds for vendors in their jurisdictions.
Another ₩60 billion ($43.5 million) of government money is available for travel agencies.
Both delinquent marketplaces are owned by Asian e-commerce pioneer Qoo10.
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The companies stopped paying vendors in early July, citing a payment system glitch. As time rolled on and payments weren't made, vendors first wore the cashflow crunch before [8]protests began and the government stepped in.
[9][10][11]South Korea creates $445M bailout fund after payment glitch trips up e-commerce giant
[12]Facebook rated least safe e-commerce option in government rankings
[13]Amazon: Our cloud growth just sped up. Did you know we are also quite a big retailer?
[14]Samsung labor union orders members back to work and a 'tactical transition' to ongoing action
On Wednesday, the finance ministry revealed that WeMakePrice and TMON still have not settled payments. Collectively, the amount of money owed totals ₩278 billion ($201 million). Seventy-nine percent of that covers merchandise and 21 percent in gift certificates.
An additional but less discussed ₩19.2 billion (13.8 million) from fellow Qoo10 property Interpark Commerce is also unsettled.
"So far, it is estimated that there are 3,395 sellers who have suffered from delayed settlement. The amount of damage to consumers related to general products is estimated to be at least six billion won, and it is likely to be further expanded if gift certificates and travel products are included," revealed the ministry.
Seoul will start settling collective disputes and supporting civil suits for victims next week.
In 2022, Qoo10 was [15]rated one of the "safe" e-commerce options by Singapore's Inter-Ministry Committee on Scams (IMCS). ®
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[5] https://www.theregister.com/2024/07/30/south_korea_ecommerce_bailout_fund/
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[8] https://en.yna.co.kr/view/AEN20240726002800320
[9] https://en.yna.co.kr/view/AEN20240726002800320
[10] https://en.yna.co.kr/view/AEN20240726002800320
[11] https://www.theregister.com/2024/07/30/south_korea_ecommerce_bailout_fund/
[12] https://www.theregister.com/2022/05/17/facebook_rated_least_safe_ecommerce/
[13] https://www.theregister.com/2024/08/02/amazon_q2_2024/
[14] https://www.theregister.com/2024/08/06/samsung_union_rto/
[15] https://www.theregister.com/2022/05/17/facebook_rated_least_safe_ecommerce/
[16] https://whitepapers.theregister.com/
As these marketplaces take our cash within hours* of shipping I think moving it on to the vendor within 14 days after that is perfectly reasonable.
*modern banking - near instant account updates.
The worst I have seen (not in IT) is something like "75 days from end of month, 2.5% discount"
So that's you getting paid two and half months after the end of the month you invoiced them. 'End of the month'- so if they order a box of your product (which will be delivered within a couple of days) on the 2nd of the month and you invoice them at the same time, then they will pay you about 100 days after they've had the goods (and possibly two months after they've sold them to the consumer)
And if they pay you before that long distant 75 days, then they are going not pay you 2.5% of the invoice because they paid you in a slightly less than ridiculous length of time after getting your product which they may have already sold and gotten paid for.
Supermarkets in Britain were paying some suppliers twice a year. Until the practise got banned, 20 years ago. So farmers might have some invoices paid after 7 months. And that’s before accounts departments making spurious queries to push invoices into the next payment run. You’d hope that last didn’t happen, but I’ve done credit control in a past life, so I’m either deeply cynical - or as I’d put it… a realist.
Story is missing something...
So WHY are Qoo10 not paying? Bankruptcy? Someone's taken the money and run? And is the Korean Government going after Qoo100? They're bailing out the businesses with short term loans, but that sort of assumes, that the payments are going to restart ASAP. Which isn't the impression I get from the article...
40 days are already a lot, 30 days should be standard, with a penalty if the payment is delayed further.