People line up in front of the headquarters of Mergeplus to demand a refund from the company in Seoul on Aug. 13. (Yonhap)

Politicians have started to look closely into the snowballing fiasco of prepaid discount service Mergepoint on August 19, raising expectations that it could help speed up the passage of a revision to the controversial e-payment law. The revised Electronic Financial Transaction Act (EFTA) has been pending at the National Assembly for nine months.

Park Wan-joo, the policy committee chairman of the ruling Democratic Party of Korea, said the government and the party were taking the case very seriously and are putting forth their best efforts to come up with measures that would minimize damage to customers and franchisees.

“In light of the (Mergepoint) incident, we will make efforts to identify and inspect other similar cases related to the EFTA,” Park said. “The government and the party will focus on eliminating blind spots under the laws of the EFTA and the Online Platform Law.”

Park’s comments reflect growing calls to pass the revision to the EFTA, a key law that governs new payment methods such as digital payments.

On August 18, the Bank of Korea, the country’s central bank, urged authorities to take swift action so as to reinforce customer protection.

The major overhaul of the 17-year-old law has come to a standstill partly due to the disagreement between the Financial Services Commission and the Bank of Korea as the revision is widely believed to give the financial watchdog more control over electronic payment services.

On the same day, financial authorities asked the police to launch an investigation into Mergeplus, the operator of Mergepoint, saying the company failed to respond to the FSC’s request for income statements. This means that financial authorities are unwilling to wait for the company to get registered as a proper business, which Mergeplus promised to do by the end of August.

“In order to be registered as an electronic financial transaction operator, a company has to file various documents including an income statement. We requested that Mergeplus submit these documents multiple times but they remained silent,” an official at a financial authority said.

Mergeplus launched Mergepoint, an electronic payment service, in 2018. Consumers can buy Mergepoints for 20 percent less than their face value, and use them in local retail franchises, convenience stores and coffee shops.

The service attracted more than 1 million deal seekers. However, the demise of the company began when the company suddenly halted the sales of Mergepoints and decreased the number of stores where customers could use their points last week, following warnings from financial authorities.

By Park Ga-young (gypark@heraldcorp.com)