Card Companies Accelerate Open Banking... "Much Road Ahead for Agreement on Contributions and Fees"

Forming TF and Starting Full Discussions on Participation Within the Year
Challenges Include Network Cost Burden and Usage Fees

[Asia Economy Reporter Ki Ha-young] Card companies have begun full-scale discussions to participate in open banking within this year, a long-cherished goal. The card industry has set a policy to join as soon as possible, but there are many hurdles to overcome, such as cost-sharing for the open banking network and fairness issues with fintech companies regarding fees for using the open Application Programming Interface (open API), so it is expected to take a considerable amount of time.

According to the card industry on the 10th, last month, card companies formed a task force (TF) with the Credit Finance Association to participate in open banking and are currently negotiating related guidelines with the Korea Financial Telecommunications and Clearings Institute, the operator of open banking.

Open banking is a type of financial shared network. It is a joint payment system that allows users to view all bank accounts, transfer money, and make payments through a single application (app), which was fully implemented in December last year. Initially, the users were limited to banks and fintech companies, but as the Financial Services Commission expanded it to the secondary financial sector, card companies are also participating. A prerequisite is the disclosure of card usage details (payment history). Card companies without accounts are gathering consensus to participate in open banking by providing customers' card usage information instead of accounts.

Card companies are eager to participate in open banking. If open banking is allowed for card companies, they can use the open banking network for card payment withdrawals and merchant payment transfers at low fees. It can also accelerate the development of future growth businesses such as MyData and MyPayment services.

However, there is also a forecast that it will take more time than expected to reach an agreement on cost-sharing for the open banking network and fees for using the open API.

Regarding the contribution fees, card companies want to bear a burden at the level of securities companies and savings banks that have already confirmed participation in open banking. They also raise fairness issues with fintech companies that do not pay contribution fees and pay only about one-tenth of the fees. A representative from Card Company A said, "Fintech companies are practically only receiving benefits," adding, "It is difficult to bear excessive contribution fees."

It is also known that there is a difference in position regarding the fees for API usage under negotiation. Card companies argue that they should receive fees at the level of fintech companies. A representative from Card Company B said, "It is welcome that we are participating in open banking, but the process of negotiating API fees along with contribution fees will not be easy."

Another industry official said, "We are frequently communicating by inquiring with the Korea Financial Telecommunications and Clearings Institute about any questions regarding participation in open banking," adding, "Since secondary financial institutions such as savings banks will sequentially participate in open banking by the end of this year, discussions are underway to enable card companies to participate within this year as well."

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