Credit card firms denounce fees billAfter holding their fire, credit card companies are lashing out at a bill that would give the government the power to set fees for transactions.
The credit card industry says it will take the issue to the constitutional court if politicians do not withdraw a bill that would allow the government to set transaction fees.
According to the Credit Finance Association yesterday, the bill goes against the constitutional rights to pursue happiness and personal wealth.
The association plans to lobby lawmakers and judiciary committees on the legislation at the National Assembly to prevent the bill from going further.
Over the weekend, heads of major credit card companies including Samsung Card, Hana SK Card and Shinhan Card met and agreed to join forces with labor unions to protest the bill.
Financial industry labor unions gathered earlier in the day in Yeouido, western Seoul, to protest the bill.
“Allowing the financial regulator to set the commission rates raises the question of whether Korea is a country that respects the order of the free market,” said Park Jo-soo, head of the Korean Federation of Clerical and Financial Labour Unions.
“This is an irresponsible action that arose from the populist impulses of lawmakers,” he said.
Government officials have also opposed the idea.
Kim Seok-dong, Financial Service Commission (FSC) chairman, reportedly criticized lawmakers during a meeting yesterday.
Kim agreed that high transaction fees are a problem for some consumers but disapproved of the lawmakers’ solution.
“It is difficult to find a precedent where the fees in the private sector are set by the government and forced by law,” Kim said.
“Not only is it technically difficult for the government to analyze the raw costs and propose a rational rate, but even if it did, it could later grow into a larger social conflict.”
The FSC chairman proposed that the problem be solved not through legal force but through market-friendly means.
On Thursday the National Policy Committee passed a reform bill on the credit card industry that will grant the FSC the power of setting transaction fees imposed on small and medium-sized stores.
The controversy dates back to nearly half a year ago when small store owners, including restaurateurs, held a massive rally demanding that credit card companies lower their commission rates on credit card transactions from a maximum of 2.15 percent to 1.5 percent. The credit card industry complied and lowered the rates to between 1.8 percent and 1.6 percent.
The lawmakers’ proposed bill is seen as a vote-winning strategy for the general election less than two months away.
“The lawmakers may deny it but their intention is particularly obvious when you consider that the bill passed the committee so swiftly without any protest,” said an analyst.
By Lee Ho-jeong [firstname.lastname@example.org]
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