The South Korean Fair Trade Commission is urging card companies in that country to allow their cardholders to earn reward points on purchases made overseas, according to a statement issued by the antitrust group.
“In this day and age, when locally issued credit cards are universally used here and abroad, there is no reason not to offer mileage points for overseas purchases,” the statement notes.
Korean issuers say that they do not offer reward points on overseas spending because it creates additional cost, and the slump in spending does not merit such a move. However, the agency contends such purchases generate significant fees for card companies.
“Hence, the practice of not offering mileage points for purchases made outside Korea for no rational reason should be annulled,” the statement notes.
Koreans’ credit card spending overseas rose to US$6.7 billion in 2008 from US$3.6 billion in 2005, before slumping to US$5.3 billion in 2009 because of the recession, according to the Bank of Korea.
Korean cardholders can earn reward points on purchases made domestically at certain gas stations, stores and retail kiosks, and they usually convert the points to cash payouts. However, they don’t earn points when paying utility bills and taxes.
Officials from the Credit Finance Association of Korea, an industry organization representing Korean card companies, did not respond to requests for comments by PaymentsSource deadline.
