Small Card Merchants Can Use Card Loans Even on Weekends

[Asia Economy Reporter Kim Hyo-jin] Small-scale credit card merchants can now receive part of their card sales proceeds even on weekends to use as operating funds.

The Financial Services Commission announced on the 3rd that it has changed its legal interpretation to this effect to alleviate the financial difficulties of small card merchants.

Card companies pay card sales proceeds within 2 business days after card payments for merchants with annual sales of 500 million won or less (83% of all merchants). However, payments are not made on card companies' non-business days such as weekends (Saturday and Sunday) and public holidays.

Because of this, some small merchants frequently borrowed money at high interest rates equivalent to their card sales receivables from loan companies to secure operating funds such as raw material costs on weekends and public holidays when card sales proceeds were not paid.

According to this measure by the Financial Services Commission, small merchants with annual sales of 300 million won or less can apply for a loan from the card company for part of the card approval amount generated from Thursday to Sunday and receive payment during the weekend.

The funds received will be automatically repaid by deducting them from the card sales proceeds that the card company must pay to the merchant by the following Tuesday.

The Financial Services Commission stated, "Considering the purpose of supporting small merchants, we expect card companies to design and provide products that allow merchants to apply for and use funds easily at lower costs."