Consumer Protection in Digital Payment Systems: Legal Challenges and Comparative Perspectives in Mongolia, China and South Korea

Abstract

The rapid development of digital payment systems has transformed financial transactions, improved payment convenience, and expanded access to financial services. However, the increasing use of electronic wallets, mobile payment applications, electronic money, and online payment platforms has also created new consumer protection challenges, including unauthorized transactions, digital fraud, misuse of personal data, technical failures, and difficulties in obtaining compensation. This study aims to conduct a comparative legal analysis of consumer protection in digital payment systems in Mongolia, China, and South Korea. It examines similarities and differences in their legal frameworks, identifies common regulatory challenges, and evaluates potential legal mechanisms for strengthening consumer protection in Mongolia. The study employs doctrinal and comparative legal research methods, drawing on relevant legislation, regulatory instruments, scholarly literature, and institutional approaches to payment-service supervision and dispute resolution. The analysis focuses on the principal legal frameworks governing digital payment services in the three countries. In Mongolia, particular attention is given to the Law on National Payment System, which establishes the legal foundations for payment-service regulation, system security, and the protection of payment users. In China, the study examines the Regulation on the Supervision and Administration of Non-Bank Payment Institutions, which entered into force on 1 May 2024 and strengthened the regulatory framework for non-bank payment service providers. In South Korea, the Electronic Financial Transactions Act is examined with particular reference to electronic transaction security, financial service provider liability, and consumer protection in electronic financial transactions. The comparative analysis is structured around five key dimensions: regulatory authorization and supervision, liability for unauthorized transactions, protection of customer funds, personal data protection and cybersecurity, and consumer complaints and remedies. Through these dimensions, the study evaluates the extent to which existing legal frameworks address emerging risks in digital payment services and provide effective safeguards for consumers. The study emphasizes that effective consumer protection requires more than the formal recognition of consumer rights. It also depends on clearly defined liability mechanisms, transparent obligations for digital payment service providers, accessible dispute resolution procedures, effective compensation mechanisms, and consistent regulatory enforcement. The findings are intended to provide a comparative legal basis for identifying regulatory gaps and developing recommendations to strengthen the legal protection of consumers in Mongolia's rapidly evolving digital payment environment