With the advent of the information age, financial transactions including fund transfer have experienced a revolutionary change taking advantage of the computer and communications technology. The progression of money started from commodity money and barter arrangements in ancient times, to gold and silver products in the medieval age, to the present paper notes and checks, and even further to credit/debit cards. Increasing use of electronic money in the course of electronic commerce transactions, particularly through Internet, gives rise to a new dimension in regulatory framework. For example, the adoption of state of the art information technology to banking operations has transformed the ways and means of payment and fund transfer.

Since the early 1950s when the U.S. banks used computers in transferring wholesale funds, the electronic fund transfer (EFT) has become the core element of banking community around the world. In Korea, electronic payment systems by means of cash dispensers (CD), automated teller machines (ATM), point-of-sale (POS) terminals have become an important part of everyday life. The newly organized CD networks among member banks, and the Bank of Korea(BOK)-wire are expected to gradually replace the traditional paper-based payment systems.

Electronic commerce via Internet would make the use of electronic money requisite and inevitable. General usage of electronic money as well as electronic payment systems will accelerate the advent of cashless society, and the digital cash will become a kingpin in this information age. Though the EFT systems and electronic wallet/cash are very convenient and profitable to the parties concerned, they have caused a number of legal and regulatory issues hard to tackle with the conventional legal principles and minds.

Korea's computer networks in the financial sector include CD networks commonly used by member banks' customers, automated response systems (ARS), automated on-line clearing systems as well as firm banking/home banking systems in its burgeoning stage. However, we do not yet envisage the legislation to regulate electronic fund transfer and electronic payment systems.

At present, the legal issues in respect of electronic fund transfer and electronic payment are usually settled by the Civil Code, Commercial Code, Bills and Notes Act, Checks Act and other banking and finance laws and regulations. On the other hand, everyday business transactions are regulated on the basis of contracts between the financial institutions and their customers. The problem still remains because these laws and regulations are originally oriented to the paper-based transactions and could not fully cover the electronic commerce transactions.

Bearing these in mind, this report has conducted an in-depth research into the electronic payment systems both at home and abroad, and introduced policy measures on how to prepare and structure the electronic payment systems including operating systems, general agreements for customers and member shops as follows:

1. In order to foster electronic payment by means of credit cards, it is necessary to amend the Credit-specialized Financiers Act and to adopt standard SET (secure electronic transaction) - a comprehensive protocol and infrastructure specification to support bank card payments developed by Visa and MasterCard;

2. In the absence of regulatory framework, it is advisable to establish general conditions/agreements on electronic payments so as to regulate the relationship and accounting between the trading parties in a reasonable way;

3. In this context, individual general agreements for the use of electronic money and those for the member shops are deemed to be required for efficient and binding electronic payment;

4. In light of the developments of electronic commerce, the legislation of the "Electronic Payment Act" is recommended taking into account foreign legislative examples; and

5. Several policy measures from the point of monetary and financial view on electronic money, which will be increasingly used in the near future, are suggested accordingly.
(Source: Astract from the Consulting Report to KNC, May 1998)