The MyData billing calculation system that was finally confirmed heralds a ‘direct hit’ to the fintech industry

Starting in July, operators will be charged according to My Data traffic
However, a 50% cost reduction for small and medium-sized MyData operators
Fintech industry: “It’s obvious that small and medium-sized companies with large losses will be burdened”

The government’s billing plan to calculate My Data transmission fees at the cost level has been confirmed. Accordingly, Big Tech will have to pay about 20 billion won in charges based on traffic, and the bank will be distributed about 10.7 billion won. However, among MyData operators, it was decided to reduce costs by 50% for small and medium-sized companies with sales of less than 8 billion won over the previous three years. Considering the current situation in the fintech industry, where few companies are making a profit in My Data-related businesses, there are concerns that small and medium-sized businesses that regularly update My Data will be hit mainly.

Korea Credit Information Service “Charges at the level of data transmission cost, 50% reduction for small and medium-sized companies”

On the 10th, the Korea Credit Information Service (Shin Jeong-won) held a ‘My Data Billing Briefing Session in the Financial Sector’ for major My Data businesses and announced the My Data billing operation plan and billing system. Representatives from industries such as banking, mutual finance, P2P (online investment-linked finance), credit finance, insurance, telecommunications, and electronic finance attended the briefing session.

My Data is a service that collects and analyzes personal financial status information and was introduced in early 2022. Financial companies provide consumers with information such as financial and consumption patterns, and fintech companies can use this to recommend financial products suitable for consumers. However, as data providers continued to raise the position that charging was necessary due to the cost burden of MyData implementation, the financial authorities delivered the charging calculation procedure prepared through the services of an accounting firm last month to Naver Pay, Kakao Pay, Toss, etc. Afterwards, on the 4th, industry opinions on the draft billing calculation were collected and the final draft was confirmed.

In order to maintain the freshness and accuracy of the data, My Data information transmission is ‘regular transmission’, in which the My Data operator requests direct transmission on a regular basis even without the customer accessing the app, and the customer directly accesses the app to refresh, update, etc. It is divided into ‘irregular transmission’ that implements. At this time, the proportion of regular transmission out of the total call volume was around 22%, and the My Data billing amount included in the final plan was set at 28.2 billion won based on the ‘regular transmission’ data rate and the cost input.

The fee for 28.2 billion won is distributed to operators based on the ‘proportion of the total number of successful API calls’. In other words, the entire My Data billing is based on regular transmission, but the operator pays in proportion to the total traffic volume of regular and irregular transmission. The purpose of this is to prevent operators from intentionally changing customers’ consent to regular transmissions in order to avoid charges.

Accordingly, the three big tech companies, including Naver Pay, Kakao Pay, and Toss, plan to pay the My Data fee in proportion to traffic. Of these, Toss, which accounts for the largest traffic volume in the industry at more than 50%, is expected to pay an amount ranging from a minimum of 10 billion won to a maximum of 14 billion won. In addition, Shin Jeong-won plans to charge My Data fees for each industry, including card capital, banking, fintech, financial investment, and insurance, in addition to Big Tech starting in July.

However, considering the situation in which small and medium-sized my data operators are unable to make profits from the my data business, it was decided to reduce the billing amount by 50% for small and medium-sized operators. The standard for small and medium-sized businesses is those with sales of less than 8 billion won over the previous three years or within one year of the service implementation date.

Fintech industry in tears over my data charges

There are concerns in the industry about the MyData billing plan. They say they will charge based on the costs incurred for regular transmission, but this could be a new burden in a situation where most fintech companies are currently recording losses.

According to the Financial Supervisory Service, the total deficit of the three companies, Kakao Pay, Toss, and Finda, as of the end of last year was KRW 1.058 trillion, an increase of more than 37.51% compared to the same period last year (KRW 76.9 billion). The expansion of the deficit, which refers to the excess amount when expenses exceed the total income, means that the state of capital erosion is worsening. In particular, as of the third quarter of last year, the accumulated net loss of Viva Republica, which operates Kakao Pay and Toss, reached 16.8 billion won and 182.5 billion won, respectively.

Currently, there are very few companies in the fintech industry that are making a profit from my data-related businesses. The burden may be less for companies that make profits in other businesses, but small and medium-sized companies that jump into a new market will face limitations in their management if information usage fees are imposed on top of existing deficits. An official in the domestic fintech industry said, “While the proportion of regular transmissions varies for each business, it is expected that businesses with a large proportion will suffer a large loss,” adding, “There was no disagreement in most industries about paying the cost of transmitting my data.” “Under the circumstances, I wish the payment period could be delayed further,” he said, expressing his regret.