Request for Tripartite Consultation on Card Fee Improvement Measures
[Asia Economy Reporter Ki Ha-young] Ahead of the recalculation of franchise fees scheduled for this November, the Card Company Labor Union Council has called for the abolition of the qualified cost recalculation system and demanded that labor, management, and government jointly develop improvement measures for card fees.
On the 28th, the National Office Financial Services Labor Union, the National Financial Industry Labor Union, and the Card Company Labor Union Council held a press conference regarding the reduction of card fees and urged the abolition of the qualified cost recalculation system. The council stated, "Over the past 12 years, the card industry has seen 13 reductions in franchise fees, resulting in a 40% reduction in business outlets, and the number of card solicitors, which once approached 100,000, has now dropped to only 8,500," adding, "The credit sales payment sector of card companies is already operating at a deficit." They explained that at 96% of franchises receiving preferential fee rates, the more sales generated, the greater the accumulated deficit.
The franchise fee rate is recalculated every three years according to the Credit Specialized Financial Business Act revised in 2012. The fee rate is determined by reviewing qualified costs calculated based on cost analysis including card companies' funding costs, risk management costs, general administrative costs, VAN fees, and marketing expenses. The recalculated qualified costs form the basis for calculating the capacity for reduction, and the revised card franchise fee rates are applied starting next year.
The council argued, "Reducing card fees when the actual burden effect on small merchants is 0% leads to cuts in labor costs for card workers, suppression of investments, and reductions in marketing expenses, which ultimately boomerang back into costs," adding, "The qualified cost recalculation system, which recalculates fees based on cost reductions achieved through investment suspension, workforce reductions, and consumer benefit cuts over three years, must be abolished."
Furthermore, they urged that big tech companies should also be subject to preferential fee rates under the principle of 'same function, same regulation,' just like card companies. The council pointed out, "Credit card companies bear losses of up to about 1.5% for franchises with sales under 3 billion KRW, which are small self-employed businesses, but big tech companies charge additional fees of up to 1.4% even to small self-employed merchants," emphasizing, "This structure inevitably widens the profit gap between credit card companies and big tech companies as credit sales occur at 96% of franchises."
They criticized, "The political sphere and the Financial Services Commission demand social responsibility from credit card companies by legally setting fees below cost, while allowing big tech companies the autonomy to exploit small self-employed merchants, turning the payment market into an industry rife with unfairness."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
