Coupang payment settlement period to be cut from 52.3 days to 30 days as large retail law revision gains speed

[Financial News] A bill to cut the payment period for goods suppliers from as long as 60 days to 30 days is moving forward more quickly.
On the 1st, the National Policy Committee's first subcommittee on bill review merged and examined 18 revision bills to the Act on Fair Transactions in Large Retail Business proposed by the Korea Fair Trade Commission (KFTC) and lawmakers from both parties.
Under the current law, retailers that directly purchase goods must pay within 60 days after receiving the products. In cases such as consignment purchases, where goods are brought in on credit and paid for only after they are sold, and entrusted sales, where a retailer sells a supplier's products on its behalf, payment must be made within 40 days from the end of the month in which sales are closed. The KFTC's government proposal aims to cut those deadlines in half, to 30 days and 20 days, respectively.
If the Act on Fair Transactions in Large Retail Business passes the National Assembly, retailers known for paying suppliers later than the industry average, including Coupang and Kurly Inc., would be affected. A KFTC survey of 132 large retailers with sales of at least 100 billion won in the previous fiscal year found that the industry average payment period for direct purchases was 27.8 days. By contrast, Coupang took an average of 52.3 days, while Kurly took 54.6 days.
Lawmakers from both parties were found to have little disagreement over the KFTC's push to shorten payment deadlines. However, some criticized the agency for failing to sufficiently explain the basis for reducing the deadline to 30 days and the problems that could arise during implementation.
They also warned that the regulatory scope could become too broad, especially as the KFTC is separately seeking to grant large-retailer status to online intermediary platforms with transaction volumes of 100 billion won or more. If shorter payment deadlines and a wider regulatory scope are introduced at the same time, the move could hurt the retail and platform industries as a whole.
The KFTC, however, says the revision would have only a limited impact on the market. Among online platforms, only a few large operators such as Coupang, Kurly Inc., Kakao Corp. and MUSINSA would be the main targets of regulation. Other companies with transaction volumes above 100 billion won are mostly online retail businesses affiliated with major conglomerates, such as Hyundai Department Store and OLIVE YOUNG, so the burden from expanded regulation would not be significant.
The committee plans to continue reviewing the bill in subcommittee and coordinate the payment deadlines and the scope of regulated entities. [email protected] Jiwon Song

[email protected] Jiwon Song Reporter