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FSC warns department store on 3rd-party payment scheme

TAIPEI, Taiwan -- A regulator yesterday warned a department store that its offering of a third-party payment processing scheme may be deemed illegal as the approval process and legal amendments are still under way.

According to the Financial Supervisory Commission (FSC, 金管會), the Uni-Hankyu department store (統一阪急), an arm of the Uni-President (統一集團) conglomerate, may be in violation of laws for offering its third-party payment processing service ahead of full regulatory approval. By offering such services ahead of full regulatory approval, the department store may face severe legal repercussions for operating beyond the scope of allowed activities, the FSC said.

The FSC found that the department store is offering consumers the option of paying by Alipay (支付寶), the online payment escrow service arm of the Alibaba Group (阿里巴巴), China's leading Internet company. The service is offered by the department store through a collaborative initiative with Newb Technologies Co., (藍新科技), a company specializing in cross-boarder Internet transaction services, in an effort to offer greater convenience to visiting shoppers from across the strait.

The FSC however, acknowledged that the department store may be offering the service in question based on the fact that Newb Technologies Co.'s operations have been assessed and certified by the Ministry of Economic Affairs (MOEA, 經濟部).

Several concerns remain over the department store's use of the service, including the platform's security, said the FSC, while advising consumers to utilize more time-tested payment methods such as credit cards, and conduct third-party payment transactions at reputable financial institutions such as banks.

In response, Newb Technology yesterday emphasized that it is operating under the Legislative Yuan's guidelines, saying that its service offerings of online-to-online (O2O) payment transactions and deposits of foreign currencies fall under the draft bill governing third-party payment schemes.

The FSC however, maintained that Newb Technology's collaboration with a brick-and-mortar retailer such as a department store may be deemed illegal.

Meanwhile, in response to market rumors of JihSun Financial Holdings Co.'s (日盛金控) intent to acquire Aegon (全國人壽), the FSC stated it has communicated with both companies, and received their respective denial of the claim. The FSC, however, stated that regulations require all parties of merger bids to exhibit a sound plan for sustainable long-term operation, and that Aegon will be prohibited from selling off stocks greater than 49 percent to its buyer.

Uni-Hankyu yesterday evening announced that in in conformance with government regulations, its Alipay services will be halted for the mean time, effective immediately.

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