"Raise the Limit for Unregistered Card Transactions to 100,000 Won" Request Denied by Financial Services Commission (Summary)

Franchise Owners' 'On-site Proposals' Under Review
Justification to Minimize 'COVID Contact'
Rejected Due to Responsibility Issues for Misuse

Reference image=Yonhap News

[Asia Economy Reporter Kim Hyo-jin] The financial authorities have scrapped the plan to raise the no-signature transaction limit on credit cards to 100,000 won after careful consideration. Card merchants had requested the financial authorities to double the limit for small-amount no-signature transactions, but the request was not accepted.

The intention was to minimize contact between customers in light of the novel coronavirus disease (COVID-19), but the financial authorities rejected the proposal citing issues regarding liability for fraudulent card use.

On the 19th, according to the financial authorities, the Financial Services Commission recently disclosed the results of its review of such 'field suggestion tasks.' During the financial reform field inspection process, some merchants requested that the no-signature transaction amount be raised from the current 50,000 won to 100,000 won, prompting a review. The background of the suggestion was the need to block indirect contact through signature keypads used by unspecified many people as much as possible amid heightened anxiety due to COVID-19.

The financial authorities have been operating a financial field inspection team since 2015 to reflect voices from the financial field into policy.

Card merchants are, in principle, required to verify the identity of the person making the transaction and bear responsibility for fraudulent use. The current 'no-signature transactions under 50,000 won' was established during implementation so that card companies bear responsibility for fraudulent use only for transactions under 50,000 won.

"Cost burden due to increased compensation responsibility must be considered"

Therefore, raising the no-signature transaction limit requires additional institutional arrangements regarding liability for fraudulent use. The Financial Services Commission stated, "Careful review is necessary considering the cost burden due to increased compensation responsibility of card companies for fraudulent use," and thus rejected the proposal.

There is currently a low possibility that the scope of no-signature transactions will be expanded through further review. A financial authority official said, "There could be controversy over whether an amount far exceeding 50,000 won can be considered a 'small amount'."

No-signature transactions under 50,000 won were fully implemented in 2016 after resolving conflicts between the credit card industry and the VAN (Value Added Network) industry over fee compensation. VAN agencies’ main source of revenue is the fees received for collecting card slips (receipts) signed by customers and delivering them to card companies. If the number of slips to be collected decreases due to no-signature transactions, VAN agencies inevitably suffer damage.

At that time, card companies, VAN companies, and VAN agencies agreed, based on mediation by the financial authorities, that card companies and VAN companies would compensate VAN agencies with fees and decided to implement no-signature transactions under 50,000 won. Institutionally, all merchants can omit signatures for transactions under 50,000 won. However, some small merchants still require signatures due to issues such as outdated terminals.

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