Electronic financial transactions

Electronic financial transactions (전자금융거래/電子金融去來) refer to any transaction whereby a financial institution or an electronic financial service provider provides financial items and services through electronic apparatuses (the "electronic financial business") and the users use them in a non-facing and automated manner without any direct contact with the financial institution or the employees of the electronic financial business operator. Article 2 i of the Electronic Financial Transactions Act (전자금융거래법/電子金融去來法).

Key words
electronic financial transactions, Internet banking, electronic funds transfer, payment gateway, means of access

Electronic Financial Transactions Act
Electronic funds transfer (EFT) is the electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions, through computer-based systems.

In the United States, the Electronic Funds Transfer Act was enacted in 1978 by Congress to establish the rights and liabilities of consumers as well as the responsibilities of all participants in EFT activities in the United States.

Actually the majority of international funds transfer is executed by the Society for Worldwide Interbank Financial Telecommunication (SWIFT), which provides a network enabling financial institutions worldwide to send and receive information about financial transactions in a secure, standardized and reliable environment.

In Korea, the Electronic Financial Transactions Act was promulgated in 2006 and came into force on January 1, 2007. The Act is to establish the rights and liabilities of consumers and other participants in the electronic financial transactions thereby to ensure their safety and reliability.

Terms used in the electronic financial transactions
Under the Act, the electronic funds transfer (전자자금이체/電子資金移替) means any transfer of funds made in any such manner as falling under any one of the following items from an account opened with a financial institution or electronic financial business operator (limited to any account linked to a financial institution; hereinafter the same shall apply) to another account through an electronic apparatus for the purpose of transferring funds between a payer and a payee: Article 2 xii
 * (a) A payment request made by a payer to a financial institution or electronic financial business operator; and
 * (b) A collection request made by a payee (the "collection transfer") to a financial institution or electronic financial business operator.

The electronic payment transaction (전자지급거래/電子支給去來) means any electronic financial transaction whereby the person performing payment (the "payer") has a financial institution or an electronic financial business operator transfer money to the person receiving payment (the "payee") using any electronic payment means. Article 2 ii.

The payment gateway system (결제중계/決濟中繼시스템) meawjsns any financial information processing operation system to deal with business affairs relating to the settlement of accounts and payments by transmitting electronic financial transaction information between a financial institution and an electronic financial business operator. Article 2 vi.

The electronic payment settlement agency service (전자지급결제대행/電子支給決濟代行) means any service rendered to transmit or receive payment settlement information in purchasing goods or using services in the electronic form or to execute as proxy or mediate the settlement of prices thereof. Article 2 xix.

The means of access (접근매체/接近媒體) means any means or information falling under any one of the following items which is used to make a transaction request in electronic financial transactions or to secure the authenticity and accuracy of the users and the contents of such transaction: Article 2 x.
 * (a) An electronic card or other electronic information equivalent thereto;
 * (b) An electronic signature creating key referred to in subparagraph 4 of Article 2 of the Electronic Signature Act and a certificate provided for in subparagraph 7 of the said Article;
 * (c) A user number registered with a financial institution or an electronic financial business operator;
 * (d) Bio-information (biometrics) of users; and
 * (e) Any password required to use any means or information referred to in item (a) or (b);

The electronic claim (전자채권/電子債權) means any creditor's monetary claim stated in an electronic message meeting the following requirements:
 * (a) For the debtor to designate the creditor;
 * (b) To include the contents of debts in the electronic claim;
 * (c) To include the certified electronic signature referred to in subparagraph 3 of Article 2 of the Electronic Signature Act;
 * (d) To be registered with the electronic bond management agency under Article 29 (1) (the "electronic claims management agency") via a financial institution; and
 * (e) For the debtor to transmit an electronic message meeting all requirements of items (a) through (c) to the creditor pursuant to Article 6 (1) of the Framework Act on Electronic Commerce and for the creditor to receive it in accordance with Article 6 (2) of the said Act.

Scope of application of the Act
Except as otherwise prescribed by other Acts, this Act shall apply to all electronic financial transactions: Provided, however, that it shall not apply to the electronic financial transactions determined by the Implementation Decree from among those conducted upon a contract separately concluded between financial institutions and electronic financial business operators. Article 3 (1).

Latest Amendment
The latest amendment to the Act comes into force on November 23, 2013.

The Act has been amended:
 * To make it clear that financial institutions are legally responsible for hacking incidents to ensure the safe transactions; Article 9 (1)
 * To require the applicable financial institutions to establish an IT-related plan each year and submit the plan approved by CEO to the Financial Services Commission (FSC); Article 21 (4)
 * To require FSC and financial companies to immediately respond to incidents attacking the electronic financial infrastructure; Article 21 (5) and (6)
 * To exclude the financial institutions such as collective investment agencies and investment consulting agencies, which do not conduct financial financial transactions, from the scope of application. Article 3 (3).

Related Statutes

 * Framework Act on Electronic Message and Electronic Commerce (전자문서 및 전자거래기본법)
 * Electronic Signature Act (전자서명법)