Credit card firms are facing pressure to scrap the ongoing negotiations over card transaction fees due to resistance from large retailers.
The Financial Supervisory Service noted Wednesday that major credit card issuers including Shinhan, Samsung, KB Kookmin, Hyundai and Lotte are far from settling the seven-month-long service fee levels for the conglomerate sector.
In December 2012, the FSS instructed the card industry to ease the burden on small and medium-sized enterprises by cutting their transaction charges. This ultimately led to a business policy to raise service fees on large firms to make up for reduced income.
The original draft states that the SMEs with annual sales of less than 200 million won ($176,000) pay credit card firms service fees as low as 1.5 percent. The draft heightened the service fees of large firms with more than 100 billion won in annual sales, from the mid-1 percent range to slightly more than 2 percent.
Large firms, fearing further cuts in profit, are refusing to give their consent. As of now, 16 out of 282 large retailers in partnerships with large credit card firms are vetoing the agreement.
These 16 large retailers include Emart, Homeplus, Lotte Mart and NongHyup Hanaro Club. Also among the protesters are the country’s two largest air carriers (Korean Air and Asiana Airlines), the three mobile operators (SK Telecom, KT Corp. and LG Uplus) and Seoul National University Hospital.
“For us, only a slight rise in credit card transaction fees can be hugely destructive, when the economy is this bad,” said an official of one of the 16 retailers, under condition of anonymity.
Meanwhile, the FSS said the new article on pro-SME credit card transaction rates is a necessary process to make a healthy economic environment. “We need cooperation from the large companies to have the deal settled,” an FSS official said, expecting to see some tangible results by the third quarter.
By Chung Joo-won (
joowonc@heraldcorp.com)
