Payment app fraud surges in South Korea

What happened

Fraud was among the top Google searches in the Philippines this weekend, and the story linked to it came from South Korea. According to The Herald Business, the country's five largest banks, KB Kookmin, Shinhan, Woori, Hana and NH NongHyup, suspended 3,273 payments in the first half of 2026 because voice phishing money had been routed through the mobile payment apps Kakao Pay, Naver Pay and Toss.

That is 247% more than the 943 suspensions recorded in the first half of 2025, and already more than the 3,146 for the whole of last year. The data came from the Financial Supervisory Service and was submitted to the office of lawmaker Seo Il-jun.

Smaller amounts, more cases

The money involved grew more slowly than the number of cases. Fraud proceeds through mobile payment channels rose 19% to 3.59 billion won, about US$2.68 million, while the average loss per case fell from 3.21 million won to 1.1 million won. Regulators describe the pattern as a shift toward smaller, more frequent fraud.

Freezes of so-called master accounts, used when scam funds are still sitting in a prepaid balance at the payment company, rose 85% to 324 cases. Kakao Pay accounted for 59% of all suspensions between September 2024 and June 2026, the report says.

Why payment apps are targeted

The Herald Business points to two reasons. Mobile payment services let people move funds with simple authentication such as a password or a fingerprint. Money also moves between prepaid balances inside payment companies, which historically made it hard for banks to follow the flow in real time. A 2024 rule change made information sharing between banks and prepaid service providers mandatory, so that the account holding the money can be frozen wherever it ends up.

The regulatory response

The Financial Services Commission plans to upgrade its AI-based information-sharing platform and its abnormal transaction detection system to cover mobile payment flows. At a parliamentary audit on 8 October, FSC Chairman Lee Eog-weon said he would consider a no-fault compensation system for victims, Asia Economy reported, and said overall voice phishing cases this year were down about 70% from 2025, even as scams shift to new forms.

The idea is not new. In July the FSC sent lawmakers a blueprint under which banks would reimburse victims unless an exemption applies, with the victim's bank and the bank holding the fraudulent account each paying half, The Korea Times reported. The cap would be set by decree at between 10 million and 50 million won. Banks objected that the shift in the burden of proof is disproportionate and could lead to tighter controls on remote transfers. Reported losses from this kind of fraud reached 433.8 billion won in 2025, up 14.1% and the highest in five years.

Why it matters for payments

The case shows the trade-off every money transfer app faces: the easier a payment is, the easier it is to misuse. Interest in the topic is not limited to Asia. In Germany, searches for how to recall a bank transfer on suspected fraud are rising, according to Google Trends data we reviewed, a reminder that a payment, once sent, can be hard to get back.

What to watch next

Watch whether Korea's National Assembly moves the no-fault compensation bills forward, how the cost is shared between banks, payment companies and telecom operators, and whether faster fraud detection reduces the number of suspended payments in the second half of 2026.

What it means for ODIX Pay users

With ODIX money transfer you can send money to bank accounts abroad, and the fee and exchange rate are shown before you confirm, so you can check the recipient and the amount first. For an international money transfer paid to you, a virtual IBAN in your own name lets you receive it directly. Be cautious with unexpected calls asking you to move money urgently. Availability depends on your country, and fees are shown in the app. More stories are in the ODIX Pay newsroom.