The government's push to establish guidelines for secondhand trading services, including mandatory secure payment systems, is putting related startups on high alert. While mandating secure payments would reduce the frequent fraud cases in secondhand transactions, companies will likely need to modify their services to comply with the new guidelines.
According to industry sources on the 13th, the Korean Agency for Technology and Standards (KATS) held a meeting with executives from major secondhand trading startups late last month to discuss service standardization measures. The meeting follows up on an idea for standardizing secondhand trading platforms that was selected as an outstanding entry in last year's "Public Convenience Standardization Idea Contest."
The guidelines are being developed to cover all aspects of secondhand trading services, from membership registration to payment processing, settlement, and damage compensation. The industry is particularly focused on the mandatory secure payment provision. The representative method is an escrow system where a third party holds the buyer's payment and releases it to the seller only after the transaction is completed. This effectively prevents fraud in secondhand transactions.
The issue is that not all startups operating secondhand trading services have implemented secure payment systems. Notably, Karrot, where most secondhand transactions occur face-to-face, conducts many of its in-person transactions without secure payments since neighbors meet directly to inspect items before trading. If the guidelines effectively mandate secure payments, some companies may need to consider restructuring their services. In contrast, Bungaejangter became the first secondhand trading platform to introduce secure payments in 2018. As of August 2024, the company transitioned all transactions to its secure payment system. Joonggonara has also been applying secure payments to all transactions, regardless of whether they are conducted in person or online, since last year.
KATS maintains that the guidelines will not have legal binding force. However, if other regulations cite the KATS guidelines, they could gain indirect binding force. This is why the industry expects the guidelines to have significant real-world impact once fully implemented. An industry insider said, "Since compliance with the guidelines could be used as a marketing tool, companies will ultimately have no choice but to follow them." The source added, "Startups like Bungaejangter and Joonggonara that have been operating secondhand trading services for years likely already meet most of the guidelines, but smaller startups may face a significant burden."