Card Company Union Threatens Total Strike... Customer Service Paralysis Due to Fee Reduction

Press Conference Opposing Additional Card Fee Reduction on the 8th
Strike Level to Be Decided Starting the 15th
Worst-Case Scenario: Potential Customer Service Disruption

[Asia Economy Reporter Ki Ha-young] Ahead of the announcement of the franchise store commission fee reform plan returning after three years at the end of this month, the card company labor unions have opposed further reductions and have taken out the total strike card. The unions are determined to involve even the departments related to customer card usage if they enter a total strike. There are concerns that in the worst-case scenario, computer systems and telephone consultations could be blocked, inevitably causing damage to customers.

On the 8th, the Card Company Labor Union Council held a press conference opposing additional reductions in card fees and announced that they would launch a government struggle including a total strike. The card company unions criticized, "Despite ten rounds of card fee rate reductions, the pain of small business owners has not improved due to fundamental problems in government policy."

A representative of the Union Council said, "On the 15th, we plan to hold a total strike resolution rally in front of the Financial Services Commission and conduct member meetings by branch to continue the resolution," adding, "The decision on whether and to what extent to proceed with the total strike will be made depending on the Financial Services Commission's response." The representative also said, "In the worst-case scenario, even the computer system will participate in the strike."

If the card company unions enter a strong total strike, departments directly related to customer card usage, such as computer systems and telephone consultation departments, may also join the strike, raising concerns that customers will suffer damages.

The card franchise store commission fee rate will be decided through government-party consultations at the end of this month. The fee rate is revised every three years according to the Specialized Credit Finance Business Act amended in 2012. Based on newly calculated eligible costs, the affordability is calculated, and the changed card franchise store commission fee rate will be applied from next year. Eligible costs are calculated based on cost analysis including card companies' funding costs, risk management costs, general administrative costs, VAN fees, and marketing expenses.

The franchise store commission fee rate has been reduced 13 times over 12 years from 2007 to 2019. As a result, the general franchise store card commission fee rate, which was as high as 4.5% in 2007, has been halved to 1.97~2.04%. Small franchise stores are at about 0.8%. The card industry explains that considering tax benefits, franchise stores with annual sales below 1 billion KRW effectively have a commission fee rate in the 0% range. However, there are complaints that actual franchise store profits are in deficit. The industry estimates that operating profits in the franchise store commission fee sector recorded a loss of 131.7 billion KRW over the past two years (2019?2020). As commission fee income decreased, 40% of card sales branches were reduced, and the number of card solicitors, which once approached 100,000, sharply dropped to 8,500.

Experts point out that reducing commission fees is not a panacea. Professor Kim Sang-bong of Hansung University’s Department of Economics said, "For already small and medium-sized businesses, card fees are at zero level, and considering tax benefits, they are actually getting money back." Professor Seo Ji-yong of Sangmyung University’s Department of Business Administration also advised, "If the goal is to support self-employed people, discussing other measures such as loans would be more effective than reducing card fees," adding, "Regarding eligible costs, fairness issues with big tech companies should also be considered."

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