[Ki Ha-young's Life Card] Subscription Services, Sneaky Paid Conversion? ... Not Anymore

7-Day Advance Notice for Free to Paid Conversion
Cancellation Simplified... Available via Mobile App
Legislative Notice Until February 15, Revision Planned

[Asia Economy Reporter Ki Ha-young]Is there anyone these days without at least one or two credit cards? In modern society, anyone can have a card if they want. Credit cards have brought unparalleled convenience to daily life. Now, wherever you go, you can easily see people paying with credit cards or smartphones. As demand has increased, cards with various benefits are being released almost daily. Accordingly, Asia Economy delivers various stories related to cards, which are inseparable from our consumer life, through the weekly 'Cards in Daily Life' corner, from introducing new cards to industry behind-the-scenes and guides for card beginners.

[Image source=Yonhap News]

From now on, when subscription economy free trial services such as Netflix and Melon switch to paid services, consumers will be notified of related matters at least 7 days in advance. Canceling subscriptions is also expected to become easier.

The Financial Services Commission has announced a draft amendment to the Enforcement Decree of the Specialized Credit Finance Business Act, which includes these points. After the legislative notice period until February 15, the amendment will proceed through review by the Regulatory Reform Committee and the Ministry of Government Legislation.

The subscription economy refers to a model where consumers pay a fixed amount regularly, and providers supply specific goods or services. Representative examples include Netflix, where you pay monthly fees to watch movies and dramas, and Coupang’s regular delivery service that delivers bottled water on scheduled dates.

Subscription economy service providers operate as sub-businesses under credit card merchants or payment gateway companies, and consumers pay subscription fees via credit card or bank transfer.

With the increase in subscription economy service users due to the impact of COVID-19, there have been continuous criticisms about insufficient notification when free trials convert to paid services. For example, consumers are not informed that charges will be automatically billed before free or discount event periods end, or complicated procedures are required to cancel services. Also, if there has been even one usage, a full month’s fee is often charged with no refunds.

With this amendment to the enforcement decree, financial authorities plan to specify in the standard terms and conditions that when a free service converts to a paid one, consumers must be notified in writing, by voice call, text message, or other means at least 7 days before the conversion date. This includes cases where discount events end and the service switches to the regular fee, and notification must be given at least 7 days in advance regardless of whether paid conversion information was provided at the time of subscription.

Additionally, it will be mandatory to allow contract cancellation through simple procedures on mobile applications (apps), websites, etc., and cancellation hours will be extended.

When canceling recurring payments, if cancellation occurs before payment, fees will be charged proportionally to the number of uses before cancellation. If cancellation occurs after payment, refunds will be made by deducting fees proportional to usage. If payment was made before cancellation, consumers will have expanded options for refund methods such as credit card payment cancellation or bank transfer to receive refunds immediately.

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