Payment Service Providers Charge Higher Fees to Small Businesses... Government to Pursue Improvements

Financial Authorities Reveal Payment Fee Status of Electronic Financial Service Providers
Some Companies Charge Higher Fees to Small Business Owners
Violating the Spirit of Mutual Growth... Improvement Measures to Be Encouraged

The government is working on measures to lower payment processing fees for small business owners charged by electronic financial service providers such as KakaoPay, NaverPay, and CoupangPay. However, it has been found that some companies are not following government guidelines, with certain providers imposing higher fees on smaller merchants. The government plans to improve its guidelines to ensure that fees are imposed more reasonably.

According to the "Status of Payment Fees by Electronic Financial Service Providers and Future Plans" released by the Financial Services Commission and the Financial Supervisory Service on January 13, financial authorities have been encouraging competition in the market to reduce the fee burden on small business owners. Since 2023, they have introduced a fee disclosure system for simple payment services offered by electronic financial service providers.

In October of last year, the authorities also established measures to expand the disclosure of payment fees by electronic financial service providers and to strengthen regulations on electronic payment gateway (PG) businesses. The number of companies required to disclose their fees was expanded from 11 to 17, and the scope of disclosure was broadened to include more items. Additionally, electronic financial service providers were asked to voluntarily implement mutual growth measures, such as applying preferential fee rates for micro and small merchants, similar to those offered by credit card companies.

As a result of these initiatives, between August and October of last year, the weighted average payment fee rates among the 17 companies were 1.97% for card payments and 1.76% for prepaid payments. Compared to the previous disclosure, card fees decreased by 0.06 percentage points, and prepaid fees dropped by 0.09 percentage points. For the original 11 companies, the card fee rate was 2.02%, down 0.01 percentage points from the previous disclosure (2.03%), while the prepaid fee rate fell to 1.79%, a decrease of 0.06 percentage points.

Financial authorities explained that, for most electronic financial service providers, card payment fees are set preferentially (with lower fees) for micro and small merchants with lower sales volumes. It was also disclosed that, for most companies, prepaid payment fees are structured similarly to card fees, with rates varying according to the merchant's sales volume.

However, the authorities emphasized that, in some cases, certain electronic financial service providers impose uniform fees regardless of the merchant's sales volume, or even charge higher fees to smaller merchants. Such practices do not align with the intent of the government's guidelines.

An official from the financial authorities stated, "To address these issues, we plan to guide the industry toward a more reasonable fee structure that takes into account the spirit of mutual growth with small business owners, and to improve our guidelines accordingly. We will continue to communicate with the industry." The official added, "We will steadily implement institutional improvements to ease the fee burden, such as gradually expanding the scope of disclosure and strengthening the obligation to notify merchants of their fee rates, thereby continuously enhancing the transparency and comparability of fee information."