Settlement of 9 Trillion Disaster Relief Fund Begins... Card Companies on Alert Over Delay Concerns

Advance Payment to Franchisees
Estimated Monthly Interest Loss of 20 Billion KRW Due to Delays
Some Local Governments May Delay Settlements

[Asia Economy Reporter Ki Ha-young] The government has begun settlements with nine card companies participating in the emergency disaster relief fund program. This amounts to 9 trillion won, which is 95% of the emergency disaster relief funds paid by card. Card companies, which had been financing the funds on their own, are expected to breathe a sigh of relief, but they remain on high alert in case settlements are delayed.

According to the Ministry of the Interior and Safety and the card industry on the 30th, local governments have started settlements for disaster relief funds paid via credit and check cards of nine card companies (KB Kookmin, NH Nonghyup, Lotte, BC, Samsung, Shinhan, Woori, Hana, Hyundai). The target is 95% (about 9 trillion won) of the disaster relief funds paid by card until the 31st of last month. The remaining 5% will be settled based on actual usage after the validity period of the disaster relief funds ends at the end of August.

According to the Ministry of the Interior and Safety, as of the 7th of this month, 21.6 million households, or 99.5% of eligible households, have received 13.5908 trillion won in disaster relief funds. Among them, 14.63 million households received 9.6095 trillion won via credit and check cards, accounting for about 67.4% of all households. The funding for the disaster relief funds is prepared by adding 80% national funds and 20% local government contributions. When the government sends national funds to each local government, the local governments settle with card companies through their own contribution expenditures.

Card companies must receive settlements from about 220 local governments. For disaster relief funds paid by card, since the card companies first pay merchants with their own funds within two days from the approval date, settlements are necessary. The required funds are raised by card companies bearing interest rates of 1-2%. If the disaster relief fund settlements are delayed, the interest costs borne by card companies are estimated to reach an average of 20 billion won per month.

The card industry wants quick settlements to reduce the burden of financing. Originally, the government planned to pay settlements monthly based on one month’s usage, but this was not followed due to reasons such as funding preparation. Some concerns have arisen that next month’s settlements may also be delayed. In some local governments, even though settlements through the government have already been completed, documents for settlement are still being requested from card companies. An industry official said, "The longer the settlement is delayed, the greater the cost burden, so quick settlement is urgent," adding, "Whether there is a delay can only be known after the 1st when settlements are expected to be in full swing, so we are closely monitoring the situation."

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