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SEOUL, Aug. 13 (Yonhap) -- Kakaopay Corp. has provided credit information of its users to China's Alipay without the required customer consent, the financial regulator said Tuesday, an allegation quickly dismissed by the South Korean platform.
The Financial Supervisory Service (FSS) said its inspection of South Korea's leading mobile payment platform in April and May for foreign currency transactions showed the company has provided personal credit information of its customers to the Chinese firm, which is also Kakaopay's second-largest shareholder.
The FSS says the country's Credit Information Use and Protection Act requires any business to secure customer approval before providing their personal credit information to a third party, and that since Alipay is a foreign company, the suspected provision of such information required additional and separate customer consent for overseas relocation of their information.
Kakaopay argued there had been no "illegal provision of information," saying that only the limited information needed for mobile payments had been moved to the Chinese firm under a consignment contract between the two payment platforms and Apple Inc., which it claimed did not require customer approval.
The company also said the information provided to Alipay had been encrypted, leaving the Chinese firm unable to identify users or use the provided information for any other purposes than the intended detection of illegal payments.
The financial regulator later explained the South Korean payment platform has provided information on 54.2 billion transactions involving over 40 million platform users to the Chinese company since April 2018, and that the information provided included the users' Kakao account ID, their cellphone numbers and email addresses, as well as their payment information.
The company also provided the credit information of users who made overseas purchases to Alipay in some 550 million instances, although such information is not needed for overseas payment settlements, it said in a press release.
"The Financial Supervisory Service will quickly implement a sanctions procedure after a careful legal review, and it plans to conduct an inspection (of other firms) for similar cases," it added.
The corporate logo of Kakaopay is seen in this image provided by the company. (PHOTO NOT FOR SALE) (Yonhap)
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