Credit card issuers told to pay dues in three daysCredit card companies will have to reimburse retailers within three days of shoppers paying by plastic at their stores from the start of next month, in line with a new measure devised by the Financial Supervisory Service (FSS).
Companies that don’t comply will have to pay 6 percent interest on each transaction as a penalty, it added.
At present, the card issuers have up to seven days to make good on the payments. But store owners complain that the companies’ inconsistent repayment policies interrupt their cash flows and urged the government to up the pressure.
More than two million stores across the nation with a total of eight million employees accept credit cards, according to the FSS.
The FSS will also require credit card firms to hold on to the money for 10 days if the agency finds transactions are made by stolen, lost or forged credit cards.
“When stores and credit card firms became involved in disputes in the past there were no clear grounds for stores to demand compensation,” said an official at the FSS.
“The ultimate goal of the new regulation is to protect the rights and interest of store owners as it now gives them legal grounds for resolving disputes.”
The new measure also enables stores to terminate contracts with credit cards firms within one month of signing them if they are unhappy with the commission rates being charged and period of repayment.
Card issuers are required to clarify their commission rate when signing contract with stores, and the latter can nullify such agreements if the card companies unilaterally raise commission rates or delay reimbursing transaction sums.
In another measure designed to give stores the upper hand, card companies can only terminate contracts with sotres that didn’t have credit card transactions for more than a year.
“All credit card firms will adopt the new provisions from next month, even though they clearly favor stores,” said an executive at one local credit card firm.
By Kim Mi-ju [email@example.com ]
More in Finance
Kospi breaks another record as buying spree continues
Samsung Life warned by the FSS about claim denials
Dollar's weakness pushes won to 30-month high
Kospi hits another high on chipmaker optimism
Eight companies agree to share credit card data