Visa’s move to raise rates draws critics among users

Home > Business > Finance

print dictionary print

Visa’s move to raise rates draws critics among users

Global credit-card provider Visa has clashed with local card companies and card users over its move to increase commission rates on both card companies and users in the country without consultation.

From the users’ side, the rate will increase to 1.1 percent of entire purchases from the current 1 percent when users buy products abroad using Visa starting in October.

The fees charged for the domestic companies affiliated with Visa will also increase, though the amount was not revealed.

Visa’s approach to raise the rate, seen as heavy-handed by critics, came under criticism. Domestic card companies and the Credit Finance Association representing the credit card business said that Visa abruptly notified them of the decision.

“It didn’t mention any reason why they are raising the rate,” said a Credit Finance Association spokesperson.

The association said Korea is the only country in North Asia where Visa has raised the commission. “Visa said that the increase will be later applied to Japan and China,” said the spokesperson.

The rate increase was announced in May, and the association sent official complaints to Visa last month.

Visa replied to the Credit Finance Association on Tuesday, saying that it will move with its original plans.

The Korean office of Visa declined to comment about the spike. The group is reportedly considering filing complaints to the Fair Trade Commission.

“We need to discuss with card companies and will decide how to respond to the move,” the spokesperson said.

Besides the latest dispute, Visa has often come under fire for its one-sided decision-making, apparently taking advantage of its predominant market position. More than 50 percent of overseas financial transactions are processed through Visa.

Separately, Visa is accused of forcing payment gateway companies to install a specific security program. For companies didn’t comply, Visa reportedly threatened to impose $10,000 fines. Some industry sources said that this is a long-held business practice by Visa.

“It is not unusual for Visa to make a decision on their own and report to the affiliated card companies,” said a source in the card industry who spoke on the condition of anonymity.

In response, domestic card companies have fostered partnerships with other global payment companies.


BY PARK EUN-JEE [park.eunjee@joongang.co.kr]





More in Finance

Banks failed to tell borrowers they can demand rate cuts: FSS report

Stocks fall more than 1% as profit-taking continues

Profit-taking ends four-session winning streak for Kospi

Lottery sales hit record in the first half

Another recent high

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now