"We're Different"... Big Tech on Edge Over Card Union's General Strike

Reigniting Controversy Over Same Function and Regulation... Big Tech Denies "Special Privileges"
Explains Differences in Payment Systems with Card Companies and Inclusion of Integrated Management Fees

[Asia Economy Reporter Kiho Sung] Big tech companies (large information technology firms) are strongly opposing the claims of preferential treatment regarding payment platforms made by credit card companies. Ahead of the reassessment of merchant commission rates, credit card company labor unions, which have declared they would not hesitate to strike if further reductions occur, are demanding that big tech companies set their fees like credit card companies, along with the abolition of the qualified cost reassessment system. Big tech companies argue that their services and payment systems differ from those of credit card companies and that this does not violate the principle of "same function, same regulation."

According to the financial industry on the 9th, the Financial Services Commission and the Financial Supervisory Service are currently conducting a survey on the actual status of financial payments by big tech companies. Earlier, at the National Assembly’s Finance and Economy Committee audit last month, Financial Services Commission Chairman Seung-beom Ko stated, "We are currently inspecting the actual status of simple payment fees and payment gateway (PG) fees," and added, "We will carefully review the results of the survey." It is known that financial authorities recently heard related matters from big tech companies.

As big tech has rapidly grown, controversies over the principle of same function, same regulation have repeatedly emerged. One representative issue is merchant commission fees. Especially as the three-year cycle for reassessing merchant commission fees approaches, the credit card industry is pressuring the government, claiming that big tech fees are more excessive. According to the office of Kim Han-jung, a member of the Democratic Party of Korea, the merchant commission fee for preferred merchants with annual sales of 3 billion KRW or less is in the range of 0.8% to 1.6%, whereas big tech payment fees range from 2.2% to 3.08%.

The big tech industry counters that their fees cannot be compared on the same level as credit card payment fees. Currently, big tech companies provide not only the PG services offered by credit card companies but also many additional functions such as ▲order form provision ▲sales management ▲delivery tracking ▲sales data analysis for sales management, as well as ▲member management ▲reviews ▲point accumulation ▲customer center operation for after-sales management. They argue that these should be viewed as integrated management fees for the entire online commerce business, not just simple payment fees.

A big tech representative explained, "The currently disclosed fees represent the maximum rates, and small and medium-sized merchants receive preferential fee rates." He added, "Of the fees generated when payments are made with cards linked to simple payment services, about 80% goes to the credit card companies, and the simple payment companies share the remaining 20% with hosting companies, merchant sales agencies, and VAN (Value Added Network) companies."

Big tech companies perceive reductions in simple payment fees as a matter directly linked to their survival. For example, as of the first half of this year, payment services including simple payments accounted for 62.7% of KakaoPay’s revenue. KakaoPay stated in its investment prospectus disclosed last month, "Since the simple payment business accounts for a large portion of our revenue, if simple payment fees are actually reduced, our financial performance will inevitably be impacted."

Lee Jin, Chief Business Officer (CBO) of KakaoPay, also emphasized at the listing briefing, "Merchant commission fees are set as the minimum operating costs required to provide services," and added, "I want to stress that these fees have already been significantly lowered through several adjustments."

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