Insurers in South Korea reportedly are at loggerheads with credit card companies over the fees they pay when customers use cards to pay their insurance premiums.
Insurers claim the fees are too high and that the payment option should be eliminated from some types of insurance policies, report local newspaper JoongAng Daily. However, credit card companies remain firm on not changing the fees.
The root of the problem stems from a reform introduced by the Financial Supervisory Commission this summer that removed insurance from a list of services not payable by credit card.
“So now insurance companies could entice customers into buying an insurance policy by telling them they could pay the initial insurance premium by credit card,” an official at the Credit Finance Association of Korea who requests anonymity, tells PaymentsSource.
Because a credit card payment is one of the easiest ways to secure the initial premium needed to establish the contract, insurers encourage prospective customers to do so, she explains.
Insurers pay a fee of 3% of the premium paid using a credit card. “Insurers want this removed or lowered to less than 1.5%,” the association official adds.
Credit card firms are unlikely to budge, however, because payments to insurance companies represent less than 1% of their business, she explains.
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