South Korea has pledged $400 million in financial assistance to small businesses impacted by payment delays from two major e-commerce platforms, TMON and WeMakePrice, which have been unable to process payments to merchants since early July. The disruptions stem from a technical glitch in Qoo10’s payment system, a key player in the issue, as it is linked to both platforms.
The payment delays have led to significant financial strain on vendors, estimated at around 210 billion won ($152 million), prompting South Korean financial authorities to launch an investigation. The crisis has also led to long queues of frustrated customers at the offices of TMON and WeMakePrice, demanding refunds. A protest by vendors and customers is scheduled for later today.
In response to the growing crisis, South Korea’s Vice Finance Minister Kim Beom-seok announced measures to alleviate the impact. The government will offer low-interest loans to affected small businesses, extend repayment terms on existing loans, and delay tax payments. “The government will utilise all available resources to minimise the damage,” Kim assured reporters.
Qoo10’s founder and CEO, Ku, has also stepped up in response to the crisis. In a public statement, Ku apologized for the disruption and committed to using his personal assets to address the situation. “I will sell or use my entire stake in Qoo10, which constitutes most of my assets, as collateral to help resolve this issue,” he stated.
Qoo10 has estimated the damages to its customers at around 50 billion won, though it has struggled to provide a precise figure for vendor losses. The company has announced plans to secure $50 million to address the immediate financial shortfall, but details on how these funds will be raised have yet to be fully outlined, according to South Korea’s Financial Services Commission.
The payment delay crisis has highlighted vulnerabilities within the e-commerce sector, as Qoo10 operates not only in South Korea but also in Japan, North America, China, Hong Kong, Malaysia, and Indonesia. It also owns two other South Korean e-commerce firms, further complicating the financial landscape.
While the investigation continues and the government’s support measures take effect, the immediate priority is to address the urgent needs of affected vendors and customers while ensuring the long-term stability of the e-commerce sector.