Riders and Consumers: "Concerns Over Regulatory Side Effects Persist, Need to Consider Self-Regulation"
As legislative discussions on the cap on delivery fees are gaining momentum, concerns are mounting across various sectors about potential side effects. If the cap is introduced, it is expected that riders' incomes will decrease immediately and consumer burdens will increase. There are calls for a cautious approach that incorporates the opinions of diverse stakeholders and broadens the discussion table to include self-regulation, so that both the protection of small business owners and the balance of the market can be taken into account.
According to industry sources on December 14, following the Fair Trade Commission Chairman's indication last month of introducing a cap on delivery app (application) fees, several related bills have already been submitted to the National Assembly. A representative example is the "Act on Fees for Food Delivery Platform Services," proposed on December 9 by Assemblyman Kim Namgeun of the Democratic Party. This bill stipulates that platforms must apply a preferential, lower commission rate to micro and small businesses compared to regular businesses. It also includes provisions for imposing fines of up to 10% of sales revenue on unfair practices, such as passing on unreasonable fees to small business owners.
Meanwhile, there are growing observations that, contrary to the intent of the system, all stakeholders may end up being harmed. At the "Discussion on Legislative Directions for the Cap on Delivery Fees" held at the National Assembly on the afternoon of December 10, hosted by the Democratic Party's Committee for Livelihood Practices, a wide range of opinions were expressed by labor groups, consumer organizations, and academia regarding this issue.
Park Sumin, Associate Research Fellow at the Korea Labor Institute, stated, "I do not agree with discussing delivery workers' fees within the broader discussion of total platform commissions between platform operators and merchants, nor with having the Fair Trade Commission regulate this matter." Park added, "Having the Fair Trade Commission discuss the remuneration of delivery workers, who are labor providers, could conflict with their labor rights."
Regarding the issue of setting a cap on the remuneration of labor providers, Park also noted, "There are no cases in the private sector where a cap is placed on remuneration or wages." Park explained, "While delivery fees may be a cost for merchants or platform operators, for delivery workers, they are compensation for their labor, and all wages are labor costs from the business operator's perspective." In other words, there should not be a cap on fees that include delivery workers' wages.
Consumer groups have also expressed opposition. Jung Jiyeon, Secretary-General of the Korea Consumer Federation, said, "We want to raise concerns about the method and speed of implementing the cap, because there is a possibility that price increases will be passed on to consumers." Jung added, "Even overseas, after the limited introduction of caps, there have been cases of increased order amounts and delivery fees, which led to changes in how platforms maintain profitability."
Jung also pointed out that a simple cap could actually reduce delivery services in rural and agricultural areas and increase consumer inequality, underscoring the need for a cautious approach. On December 12, the consumer advocacy group Consumer Sovereignty Citizens' Coalition also issued a statement, saying, "Although consumers ultimately bear the final costs in the delivery service ecosystem, they are excluded from the discussion structure," expressing a negative view on the legislative push for a cap on delivery fees.
Given the many outstanding issues, there are also concerns that the system is being pushed forward too hastily. Ha Myungjin, Secretary-General of the Korea Online Shopping Association, said, "Delivery fees are often seen simply as a 'toll,' but delivery platforms provide a bundle of tangible and intangible services, such as search and exposure, payment infrastructure, delivery network operations, customer service, and marketing and data analysis. Therefore, instead of regulating specific cost items separately, the overall structure should be considered." Ha added, "There have been unexpected cases overseas where costs were passed on or services were reduced after the introduction of caps, so rather than adopting a single measure, a comprehensive approach is needed that takes into account the characteristics of platform structures with multiple combined functions."
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