Bill to shorten retailer payment deadlines raises fears of harm to small suppliers

Industry concern is mounting over a bill to amend the Large-Scale Retail Business Act that would sharply cut the payment deadline for direct-purchase transactions by large retailers from 60 days to 35 days, as the legislation heads toward a full plenary vote.

According to the National Assembly and industry sources, the Political Affairs Committee voted Thursday to scrap 18 pending amendment bills to the Large-Scale Retail Business Act and incorporate their provisions into a single committee substitute. The substitute bill is set to go before the Legislation and Judiciary Committee before being submitted to the full Assembly for a vote.

The bill's core provisions would cut the payment deadline for direct-purchase transactions from 60 days after the date of receipt to 35 days, and reduce the deadline for consignment, commission-based and store-lease transactions from 40 days to 20 days after the monthly sales cutoff. The terms are less stringent than the Korea Fair Trade Commission's original proposal of a 30-day deadline for direct purchases. The Fair Trade Commission had been pushing to shorten payment deadlines under the act after the large-scale settlement failure involving Tmon and WeMakePrice in 2024.

Industry groups warn the amendment could deal a serious blow to small and midsize retailers. The Korea Online Shopping Association issued a statement Thursday opposing the bill, saying that "uniformly moving up payment deadlines could cause sudden shocks to retailers' working capital and settlement systems."

The association also argued the bill could, contrary to its stated intent, shrink market access for small and midsize suppliers. If working capital tightens, retailers would have no choice but to prioritize popular products from large conglomerates or low-cost imports, it said — a paradox that would reduce order volumes and trading opportunities for smaller suppliers and erode the capacity for mutual growth. The group warned the bill "could trigger a second Homeplus crisis."

Small business owners share the same concern. The Korea Platform Merchant Association said the bill, while framed as a measure to protect suppliers, "could in practice increase the financial burden on retailers, leading to fewer orders and lower sales — threatening the survival of small and midsize suppliers and self-employed merchants." It added that shorter payment deadlines would push retailers to favor transactions with large companies, further narrowing market access for smaller suppliers.

The Korea Small and Medium Business Association said in a statement that the bill "overlooks the complex interlocking gears of the real economy" and expressed serious concern about "a chain collapse across the small and midsize retail sector." It warned that liquidity at small retailers and platforms could seize up, raising a high risk of repeated settlement failures caused by cash shortfalls. The group also noted that major Chinese platforms such as AliExpress and Temu would likely be able to sidestep the law's binding requirements.

Korea Startup Forum said the shorter payment deadlines "would have the positive effect of improving suppliers' liquidity, but at the same time could affect the working capital burden and purchasing capacity of direct-purchase retailers." It called for "careful policy design to ensure that market entry opportunities are not reduced for emerging brands and startup products that have yet to build a sufficient sales track record."