Kakao Pay and Alipay have announced that a data breach investigation has been launched.
The investigation was sparked by concerns over the security of user data.
Kakao Pay is a popular mobile payment service in South Korea, while Alipay is a leading digital wallet in China.
Both companies have assured users that they are taking the necessary steps to ensure the security of their data.
Kakao Pay Investigated for Data Privacy Breach
Kakao Pay is under investigation for a potential data privacy breach involving Alipay.
The Financial Supervisory Service (FSS) discovered the alleged transfer of personal credit information to Alipay without customer consent.
Kakao Pay outsourced the reprocessing of customer-related data to Alipay, which led to the alleged leakage of personal credit information.
Kakao Pay has strongly denied the allegations, stating that the transfer of information was handled through a consignment process between the company, Alipay, and Apple.
According to Article 17, Paragraph 1 of the Credit Information Act, user consent is not required when personal credit information is transferred through consignment for business operations.
However, if the information is transferred for the benefit of the consignee, user consent is required, which raises questions about Kakao Pay's actions.
The company emphasized that Alipay and Apple are prohibited from using the information for any other purposes, such as marketing.
Kakao Pay also highlighted its use of encryption methods to ensure data security, including an encryption method that changes the information into random codes, ensuring thorough de-identification.
The FSS's investigation into the matter began with an on-site inspection in May, but Kakao Pay has not received any official inspection reports yet.
Ant Group, the parent company of Alipay, holds a 43.9% stake in Kakao Pay, which underscores the interconnectedness of the companies and the potential implications for data sharing and business operations.
Regulatory Action
The regulatory action against Kakao Pay is underway. South Korea's financial regulator, the Financial Supervisory Service (FSS), announced that it has uncovered the issue and is currently reviewing whether it violates the Credit Information Use and Protection Act and other relevant laws.
The FSS initially began an inspection related to foreign exchange transactions at Kakao Pay in April and May 2024, which led to the discovery of the unauthorized transfer of personal credit information to Alipay.
The regulator will initiate disciplinary procedures if it confirms a violation occurred. The FSS is taking this issue seriously, and Kakao Pay's actions may have consequences.
Frequently Asked Questions
Can you use Alipay in Korea?
Yes, Alipay is available in Korea, with services accessible at over 1.7 million merchants, including major duty-free shops and convenience stores. You can use Alipay in a variety of settings, from shopping to dining and transportation.
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