Last 2 card companies agree to Hyundai’s terms

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Last 2 card companies agree to Hyundai’s terms

Hyundai Motor reached a consensus with Samsung Card and Lotte Card on commission fees on Thursday following agreements reached with other card issuers.

The two card companies accepted Hyundai’s request for fees set at around 1.89 percent, apparently ending a contentious dispute that led the automaker to threaten to terminate contracts with the companies.

The affiliates of Samsung and Lotte were the last card companies to reach an agreement with Hyundai after other companies, including Shinhan Card, BC Card and Citicard, capitulated to the automaker’s demands.

“[Hyundai Motor and the card companies] reached an amicable agreement as we prioritize easing customers’ potential inconvenience,” a source at Hyundai Motor said.

Hyundai’s protest came after credit card companies pushed up commission fees earlier this month for partnered companies with annual sales of 50 billion won ($44 million) - including the automaker. The increase, from 1.8 percent to 1.9 percent, triggered a backlash not only from the car maker but also retailers and carriers.

In response to the rise, Korea’s largest automaker announced its intention to terminate contracts with card companies in protest of the sudden hike in commission fees earlier this month.

Large retail stores like Emart and Homeplus have also been the target of card companies trying to raise commission rates.

Card companies told retail stores earlier this month that they would raise commission rates, industry sources said Thursday. Emart, Korea’s largest discount chain, refused to accept the change at the time of the announcement, but a spokesperson for the company confirmed that Emart and the card firms are currently in negotiations.

The average increase rate requested by all card companies stands at 0.14 percentage points, according to Emart’s spokesperson. This could incur between 10 billion won ($8.8 million) to 20 billion won worth of losses for the firm. Discount stores have already started paying increased commission fees, but they will be able to take back the extra money they have paid to the card companies if a deal is made in their favor.

“We’re not saying that we won’t [accept] the commission rates increase,” said a spokesperson for Emart. “But we’re currently reviewing whether the increase is appropriate.”

The highest increase rate demanded by a card firm was 0.3 percentage points, according to an industry source who wished to remain anonymous. “Excluding Lotte Mart, sales of local retail giants sum up to more than 10 trillion won, meaning that the commission rate increase could annually incur at least 27 billion won losses [in the worst-case scenario].”

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