Card Company Union's 'General Strike' Temporarily Postponed... "System Improvement TF, Conditioned on Faithful Implementation"

Commission Fee Reform Plan is a Policy Disaster
However, Expectations for Institutional Improvement TF
Strike Postponed May Become Real if Ineffective Operation Continues

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] The Card Company Labor Union Council, which had opposed the reduction of card merchant fees and announced a tough struggle, has decided to postpone the general strike. This is a conditional suspension based on the effective operation of the task force (TF) for improving the re-estimation system of eligible costs.

On the 27th, the Card Company Labor Union Council held a press conference in front of the Government Seoul Office and stated, "The result of the government-party consultation on card fees announced on the 23rd is a policy disaster," but also said, "We will provisionally suspend the general strike of card workers on a conditional basis."

Earlier, on the 23rd, a card fee reform plan was announced through government-party consultations. With this fee reform, the fee rate for small merchants with annual sales of 300 million KRW or less dropped from 0.8% to 0.5%. For annual sales of ▲300 million to 500 million KRW, it decreased from 1.3% to 1.1%, ▲500 million to 1 billion KRW from 1.4% to 1.25%, and ▲1 billion to 3 billion KRW from 1.6% to 1.5%. The financial authorities promised to form a TF to seek cooperative measures for mutual growth among consumers, merchants, and card companies while announcing additional fee rate reductions.

In response, the Labor Union Council criticized, "The authorities twisted the wrong arm without doing what they should have done," and said, "The real policy for small business owners is the regulation of fee caps for big tech and delivery apps, but they only patched it up with superficial policies."

They continued, "The credit sales payment sector of card companies is already running at a deficit, and considering the value-added tax credit system, about 92% of merchants actually receive tax refunds or have a 0% effective burden of card fees," emphasizing, "The card industry's operating loss in the merchant fee sector was 131.7 billion KRW over two years from 2019 to 2020, and the loss scale will increase further due to the recent government-party consultation results."

They added, "Ultimately, consumers and workers bear the damage," criticizing, "Card companies will drastically reduce consumer benefits to compensate for the deficit and will shift responsibility to workers through restructuring, etc."

However, the Labor Union Council positively evaluated the Financial Services Commission's willingness to comprehensively review the re-estimation system of eligible costs through the institutional improvement TF and to resolve regulatory arbitrage with big tech and fintech.

The Labor Union Council stressed, "The institutional improvement TF must not be wasted as a time-consuming measure or function as a mere rubber stamp for financial authorities," and emphasized, "The agenda of the institutional improvement TF must include the abolition of the re-estimation system of eligible costs and securing competitiveness in the credit sales sector, and representatives of the card company labor union council must be included in the TF composition, not just the management side."

They also stated, "The resolution of regulatory arbitrage with big tech and fintech companies and the guarantee of implementation for sound growth through various new business ventures and revenue source development in the card industry must be ensured," and concluded, "On this condition, we will provisionally suspend the general strike of card workers."

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