FSS to trim gap in credit card commission feesThe financial regulator said yesterday it will move to reduce the commission rates that credit card firms charge merchants in an effort to help ease smaller stores’ financial burden.
The average rate will be lowered to 1.85 percent from 2.09 percent within this year, benefiting 2.14 million merchants, or 96 percent of the 2.14 million card-accepting stores, according to the Financial Supervisory Service.
Additionally, the parameters of difference in commission rates will be narrowed. Currently, the minimum commission rate imposed on stores is 1.5 percent, whereas the maximum rate is 4.5 percent. The top threshold will be brought down to 2.7 percent, narrowing the difference from 3 percent points to 1.2 percentage points.
The watchdog said the measure will likely enable merchants to save 900 billion won ($792 million) annually in commissions paid to credit card companies.
Credit card firms will also be banned from offering lower commission rates to large merchants. Violators could face a three-month business suspension or a fine of 50 million won.
“We hope the measure will make the card fee system fairer and more transparent, helping eliminate social conflict and complaints,” Choo Kyung-ho, vice chief of the FSS, said at a press briefing.
The move comes as credit card firms have come under sharp criticism for charging far higher fees to smaller merchants than to large retailers.
In late February, the National Assembly passed a revision of a law governing credit card commissions. This compelled the financial watchdog to fix a commission rate and bans card firms from charging different rates to merchants of different industries and sizes.
The new commission rate will be applied in December, after it is applied to 1.5 million businesses with annual revenue of less than 200 million won in September.
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