The Korean government has withdrawn a plan to cap the fees credit card companies charge small and midsize retailers, an official from the Credit Finance Association of Korea tells PaymentsSource. The government and the National Assembly of Korea had planned to limit the interchange rates under a revision of the Credit-Specialized Financial Business Law.
“However, the bill that was passed last week did not contain these provisions,” the official says. Earlier, Korea’s Financial Services Commission had asked the card companies, which include Samsung Card Co. and Shinhan Card Co., to lower their maximum interchange rates to 2.4% to 2.5% of the sale at small shops. “But since the credit card companies voluntarily decided recently to lower fees to these levels from the existing 2.3% to 3.6%, the provision was no longer necessary,” she says.
Additionally, the card companies decided to lower the interchange rates at traditional markets to 1.6% to 1.9%, in line with rates applied to giant retailers, from the previous 2% to 2.2%, the official says. Local news reports indicate that card firms in Korea charge higher rates to small retailers than to department stores and large retailers to offset costs. These reports also indicate the Financial Services Commission expects card companies to lower their rates across the affected retailers by March.
The Credit Card Finance Association of Korea was established in 1998 as a non-profit organization whose members include five credit card companies, 17 leasing companies, 16 installment-financing companies and four venture capital companies.
