Attention drawn to credit card firms

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Attention drawn to credit card firms

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With Korea’s financial regulators preparing to announce yet another comprehensive set of measures to put the breaks on the credit card sector’s operations as early as this week, all eyes are watching warily to see what limitations will be imposed.

With the sector having borne the brunt of escalating demands to lower credit card transaction fees from small business owners to large automakers, speculation has been running rampant about whether the government will intervene directly to reduce the fees.

However, skepticism about the efficacy of the impending measures persists as regulators have already rolled out three separate measures this year to streamline rapidly snowballing card debts, moves that failed to address the multiplying controversies within the sector.

Officials within the policymaking Financial Services Commission confirmed yesterday that it has been preparing a comprehensive set of regulations to “improve the structure of credit card usage” in Korea. These “will seek to straighten out the rapidly expanding credit card market and promote reasonable spending habits,” said an FSC official.

“One of the main points of the measures is to encourage the use of debit cards while discouraging credit card usage.”

The credit card sector has already been the subject of three regulatory interventions this year, as indexes pointed to the rapid increase of credit card usage exceeding that of the build-up to the “credit card crisis” of 2003.

According to the Financial Supervisory Service, the amount of credit card usage during the first three quarters of this year reached 415.6 trillion won ($358.66 billion), a 9.1 percent jump from the first three quarters of 2010 with 381 trillion won. But the FSC denied yesterday reports that it will directly intervene by fixing fee rates.

“The government has caused the credit card industry to voluntarily improve the transparency and reasonableness of the transaction fee system, and has not reviewed any measures where the government fixes the transaction fee system directly,” the FSC said in a statement.


By Lee Jung-yoon [joyce@joongang.co.kr]

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