Selection of Accounting Firm for Franchise Fee TF... "Full-Scale Discussion on Recalculation of Fee Rates"

Samjong KPMG Selected as Preferred Negotiation Partner

[Asia Economy Reporter Ki Ha-young] With the selection of an accounting firm responsible for the cost analysis of card merchant commission rates, discussions for the triennial commission rate recalculation are expected to intensify.

According to the card industry on the 7th, the Korea Credit Finance Association has selected Samjong KPMG as the preferred negotiation partner for the consulting firm to conduct the cost analysis of card merchant commission rates and plans to sign a service contract this week. Once the accounting firm for eligible cost calculation is selected, a task force (TF) for commission rate recalculation will be formed, consisting of the Financial Services Commission, the Korea Credit Finance Association, and card companies.

This recalculation discussion comes three years after the card merchant commission rate reduction in 2018. The commission rates for card merchants, calculated this year, will be applied from next year through 2024. In 2018, financial authorities finalized a reform plan to reduce credit card commission rates by up to 0.65 percentage points and check card commission rates by up to 0.46 percentage points for small and medium merchants with sales between 500 million and 3 billion KRW, announcing it at the end of November.

The card industry is already concerned about further reductions in merchant commission rates, which are currently at cost level. Last year, the low-interest rate environment lowered financing costs and reduced operating and marketing expenses, which could ironically justify additional commission rate cuts. In the political arena, voices demanding further commission reductions for self-employed and small business owners struggling due to the prolonged COVID-19 pandemic are growing louder. Last month, independent lawmaker Lee Yong-ho proposed an amendment to the Specialized Credit Finance Business Act to provide additional preferential card commission rates exclusively for micro small business owners. Koo Ja-geun of the People Power Party also proposed an amendment to the Specialized Credit Finance Business Act to fully exempt card commissions on small card payments under 10,000 KRW for small and medium credit card merchants with annual sales under 3 billion KRW and to apply preferential commission rates to merchants in traditional markets regardless of sales scale.

The issue of an 'uneven playing field' with big tech companies (large information and communication enterprises) is also raised. The upper limit of credit card merchant commission rates ranges from 0.8% to 2.3%, with preferential rates applied to merchants with sales under 3 billion KRW. However, Naver Pay, which charges merchant fees like card companies, is not subject to regulations on merchant commission rates. Its commission rates are also higher, ranging from 1.5% to 2.8%, than those of the card industry. Even if Naver Pay’s commission includes credit card fees and provides various additional services, there are concerns about fairness in providing the same services. For debit-type payments rather than credit cards, Naver Pay charges 1.65% of the payment amount, whereas check card commission rates range from 0.5% to 1.5%.

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