Telecoms, credit card companies fight over fees

Telecoms don’t want credit card companies to offer auto-pay services to Internet customers anymore because the card companies are planning to increase the fees it charges them.

If customers want the auto-pay option, they’ll have to arrange it directly with the telecom companies, which will be a hassle.

KB Kookmin Card notified its customers Feb. 1 that SK Broadband, an Internet service provider controlled by the country’s No.1 mobile carrier SK Telecom, has said that it won’t offer auto-pay services to new customers.

“Customers who have been automatically paying from their card each month won’t be affected,” said an employee at KB Kookmin Card. “But customers who want to switch their payment option to automatic credit card payment from automatic withdrawal from banking accounts and new Internet service subscribers who want to pay by credit cards, must have to sign up for automatic payment service with telecom companies directly.”

Market observers said SK Broadband also notified market leaders Shinhan Card and Samsung Card.

The mobile carriers are protesting the card companies’ decision to charge higher transaction fees starting this year. In January, SK Telecom, KT and LG U+ stopped allowing mobile phone users to sign up for automatic credit card payments of their mobile phone bills through credit card firms.

After credit card companies slashed transaction fees charged to mom-and-pop stores last September, responding to government pressure to make life easier for small companies, they have been negotiating larger transaction fees for big companies like telecoms. Card companies want to raise transaction fees to between 1.8 percent and 1.9 percent. The telecoms want to keep the fees under 1.5 percent.

“Customers are becoming the victims of a power struggle between the card companies and the telecoms,” said Kim Mi-ra, a 24-year old college student.

By Kim Mi-ju [mijukim@joongang.co.kr]