Naver's 'Quick Settlement' System: Lessons from the Tmon and Wemakeprice Incidents

Naver Shopping's 'Quick Settlement' system

Recently, the delayed settlement incidents of Tmon and Wemakeprice have brought attention to Naver Shopping's 'Quick Settlement' system. Emphasizing the importance of cash flow in the e-commerce market, Naver's quick settlement service has been a significant aid to small and medium-sized enterprises (SMEs). In this blog, we will explore the background, impact of Naver's quick settlement system, and the necessity of the 'Rocket Settlement Act'.

1. The Background of Naver's 'Quick Settlement' System

In November 2020, Naver introduced the 'Quick Settlement' system, which ensures that e-commerce sellers receive 100% of their payments within three days after a transaction. This initiative was taken to foster a symbiotic relationship with sellers, despite there being no legal stipulation on settlement periods. Naver offers this service to Smart Store sellers who have a return rate of less than 20%, have had more than 20 orders per month for three consecutive months, and have passed the Fraud Detection System (FDS).

2. The Impact of the Quick Settlement System

By July 2021, the cumulative amount settled through the quick settlement service reached approximately 40 trillion KRW. This accounts for about 46% of the total Smart Store transactions, indicating widespread adoption by sellers. A Naver representative highlighted that "the most critical factor for SMEs to sustain and expand their business is cash flow," emphasizing that the quick settlement service is highly beneficial for sellers on their platform.

3. The Tmon and Wemakeprice Incidents and the Need for the 'Rocket Settlement Act'

The recent settlement delays by Tmon and Wemakeprice have severely impacted sellers. Tmon's settlement period is 40 days after the end of the transaction month, and Wemakeprice settles two months after the end of the sales month, causing significant cash flow issues for sellers. This has even led to cases of 'profit insolvency', where sellers go bankrupt despite being profitable. To address this, there has been renewed discussion on the necessity of the 'Rocket Settlement Act', which proposes a 30-day settlement period for the retail industry.

4. Naver's Proactive Response and Protection of the E-commerce Ecosystem

In response to the Tmon and Wemakeprice incidents, Naver was the first among payment gateway (PG) companies to decide on full refunds, demonstrating its commitment to protecting the e-commerce ecosystem. Additionally, Naver has implemented the quick settlement system in its resale platform KREAM, offering weekly settlements for individual business owners and immediate settlements upon inspection completion for individual sellers, thus supporting their cash flow.

Naver's 'Quick Settlement' system is an innovative service introduced to foster a cooperative relationship with e-commerce sellers. It significantly aids SMEs by ensuring smooth cash flow, preventing issues like those seen with Tmon and Wemakeprice. Moving forward, regulations like the 'Rocket Settlement Act' are essential for the healthy development of the e-commerce market. Naver's proactive measures serve as a model for other platforms, creating a better environment for both sellers and consumers.