The South Korean financial regulator has concluded that Chinese online payment firm Alipay does not need its approval to do business here, but on the condition that it only services Chinese nationals, financial sources said Thursday.

The Financial Services Commission has notified Alipay, a non-bank Internet payment affiliate of Chinese e-commerce giant Alibaba Group, of its conclusion, according to the sources.

The Chinese firm has promised to comply with the FSC’s condition, they said.

Alipay started offering an automatic settlement system in South Korea in 2012, targeting Chinese customers who visit South Korea. The payment system lets them make purchases with their own China-issued electronic cards at Korean department stores and shopping malls.

Alipay is the first case of a foreign financial firm doing business on South Korean soil with non-Korean customers.

“The Korean e-commerce law regulates companies that operate a type of payment system for local consumers. If (Alipay) doesn’t engage in this kind of business, it isn’t subject to the law,” said an FSC official.

Alipay would have to report to the South Korean authority if it expands its service to South Korean customers.

According to government data, 1.62 million Chinese visitors traveled to South Korea during the April-June period, accounting for about 40 percent of the total foreign arrivals of 3.76 million. (Yonhap)