Bill to Exempt Small Payment Fees Under 10,000 Won... Card Industry Says "Already 0%"

Concerns Over Small Payments Under 10,000 Won and Traditional Market Discounts
Refund Amount Increases Further When Tax Credits Are Applied

[Asia Economy Reporter Ki Ha-young] A bill exempting card fees for small payments was proposed in the 21st National Assembly. Card companies, whose profitability has deteriorated due to reduced merchant fee rates over the past few years, expressed concerns that the bill is ineffective.

According to the card industry on the 26th, Gu Ja-geun, a member of the Future United Party, and 10 others recently proposed the "Amendment to the Specialized Credit Finance Business Act," which includes exemption of fees for small payments under 10,000 won and preferential fee rates for traditional markets. The bill aims to exempt fees for small payments under 10,000 won for merchants with annual sales of 3 billion won or less and to apply preferential fee rates to traditional markets regardless of sales volume, in order to support small business owners and micro-entrepreneurs who have been hit by the COVID-19 pandemic.

Card companies argued that merchants meeting the criteria are effectively not paying fees due to preferential fee rates and tax credits. For micro-merchants with annual sales of 300 million won or less, the current card fee rates are 0.8% for credit cards and 0.5% for check cards. Additionally, a tax credit of 1.3% of credit card sales is deducted from sales tax, resulting in a refund greater than the fees paid.

A card industry official said, "For micro-merchants, the preferential fee rates below cost and sales tax credits mean there is effectively no fee burden. From the card companies' perspective, if fee revenue decreases further, they will have to cut costs and reduce consumer benefits."

In fact, merchant fee reductions have been implemented more than ten times over the past decade. Especially in 2018, the scope of preferential merchants was expanded from those with sales under 500 million won to those under 3 billion won, increasing the proportion of preferential merchants from 84% to 96% of all merchants. Excluding micro-merchants with annual sales under 300 million won, the fee rates for small and medium merchants with sales between 300 million and 3 billion won range from 1.0% to 1.6%. Merchants with sales over 3 billion won are charged around 2%.

Some criticize the bill as populism aimed at winning votes. They argue that the opinions of stakeholders, including micro-entrepreneurs and the card industry, should be gathered and sufficient public discussion should take place to enhance the policy's effectiveness. Professor Kim Sang-bong of Hansung University’s Department of Economics said, "There are already no fees for micro-merchants with annual sales under 300 million won. Considering the refunds through tax credits, it is questionable whether exempting card fees for small payments under 10,000 won is effective."

This content was produced with the assistance of AI translation services.