Days after South Korea’s card networks agreed to slash the interchange rates they apply to credit card acceptance at small merchants, the Korean government has said that it would strive to unify their rates.
South Korea’s major card networks announced their rate-cut plans Oct. 17 (
The new rates would take effect Jan.1.
However, the ruling Grand National Party on Oct. 18 introduced a bill that would ban card networks from imposing different rates and instead mandates an equal 1.5% charge on the sale regardless of retailer size or industry.
Card companies give better rates to retailers with annual revenues that exceed than 200 million won (US$175,000 or 127,000 euros). However, with their announced initiatives, all of them plan to offer the lower rates to retailers with revenues ranging from 120 million won to 200 million won.
No representative from the major card networks responded to PaymentsSource requests for comment on the issue. However, local media reports indicated the industry reps were unhappy because the bill would hurt issuers’ fee income.
This follows a couple of weeks of turmoil during which the Financial Services Commission, Korea’s financial services regulator, said it was considering amending the rules to allow merchants to reject credit cards for small payments.
The regulator was considering lifting the rules to counter financial pressures on Korean businesses affected by an economic slowdown that still have to pay fees for purchases of less than 10,000 won.
Instead, Korean merchants protested that the regulator pressure card networks to cut their interchange rates instead of adopting a rule that might result in businesses losing customers.
