Reducing the settlement cycle for direct purchase delivery payments from 60 days to 35 days and shortening the special agreement purchase settlement cycle from 40 days to 20 days would bring approximately 30 distributors, including large e-commerce platforms like Coupang and Curly as well as specialty stores based on offline chains such as Daiso and Olive Young, under the jurisdiction of the Fair Trade Commission for penalties.
According to the Korea Fair Trade Commission and relevant industry sources on the 9th, if the "Act on Fair Transactions in Large-Scale Retailing," which focuses on shortening the settlement cycle for delivery payments and passed deliberation by the Legislation and Judiciary Committee today, moves to plenary session, about 30 distributors will fall under its influence.
According to the Korea Fair Trade Commission's December last year survey on payment status of delivery funds, among 98 direct purchase distributors, 39 companies had average payment dates exceeding 30 days. Among these, nine companies including Coupang (52.3 days), Daiso (59.1 days), Curly (54.6 days), MChuncheon Store·Mega Mart (54.5 days), Electronics Land (52.0 days), Yeongpoong Bookstore (65.1 days), Homeplus (46.2 days), and Homeplus Express (40.9 days) were making payments close to the statutory upper limit.
If the new law is implemented and the settlement cycle for direct purchase delivery payments is reduced to 35 days, more than 20 additional companies could be newly included as penalty targets. A Korea Fair Trade Commission official explained, "After the new law takes effect, companies that fail to comply with the settlement cycle will face immediate payment correction orders and penalties based on their relevant sales volume."
In the retail industry, concerns are raised that enforcing a uniform settlement standard without considering the characteristics of each business type could lead to side effects such as reduced order volumes from small suppliers and increased consumer burdens.
An official from a major distributor stated, "Currently, settlement cycles differ by product category such as fresh food and clothing; uniformly shortening the settlement cycle will inevitably cause problems," adding, "Especially for products of small companies with low sales volume and high inventory burden, order volumes are expected to drop significantly." Another distributor official said, "A sufficient grace period should be provided while reflecting the special characteristics of product categories and business types in enforcement rules."
Reactions from small business groups are mixed. The Small Business Federation stated in a statement on the 3rd, "Considering the field's demand to shorten payment deadlines to within 15 days, setting the direct purchase transaction payment deadline at 35 days is somewhat disappointing, but we positively evaluate the intent and direction of the amendment." In contrast, the Korea Platform Store Operators Association expressed opposition, stating, "For small companies, securing stable order volumes is more important than receiving payments a few days earlier."
Concerns are also raised by consumer groups. Consumer Watch pointed out, "If payment deadlines for delivery funds become shorter, distributors may reduce discounts and point benefits or adjust free shipping thresholds and membership benefits to cut costs, leading to an increase in consumers' actual purchase prices."
Opinions also emerge that offering incentives rather than regulatory measures would be more reasonable. Professor Choi Ja-young of Soongsil University (President of the Korean Retail Association) said, "True mutual prosperity begins not with regulation but by creating an environment where companies can move voluntarily," adding, "Differential application based on supplier size and providing incentives for early payment participation are realistic alternatives."
Criticism also arises that this decision does not align with global standards. In fact, the settlement cycles for delivery payments at Amazon and Walmart in the United States are up to 90 days; those at Duanhu and Wumart in China range from 90 to 120 days; and those at Japan's AEON Group and Seven & i Holdings are up to 60 days. The European Union (EU) had proposed a policy to shorten payment deadlines to 30 days in 2023 but withdrew it due to backlash from the retail industry citing annual costs of up to €15 billion (approximately 23 trillion won) in interest expenses.
The Korea Fair Trade Commission has left room for institutional improvements. Ju Byeong-gi Gong Jeong-geo-rae (Chairman), who appeared before the Legislation and Judiciary Committee that day, said, "We will continue to monitor whether side effects occur during the operation of the law and can amend the law again in the future if necessary."
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