[Column] "How Effective Will It Be?"... Attention Focused on the Card Fee System Improvement TF

Financial Services Commission Chairman Ko Seung-beom is delivering opening remarks at the ruling party-government consultation on card fee reform held at the National Assembly on the 23rd. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Ki Ha-young] "The agenda for the Institutional Improvement Task Force (TF) must include the abolition of the eligible cost reassessment system and securing competitiveness in the new approval sector. On this condition, we will provisionally suspend the general strike."

On the 23rd, as the card fee reform plan to be applied for the next three years starting next year was announced, the Card Company Labor Union Council, which had vowed to go on a general strike, provisionally suspended the strike. This conditional suspension is based on the effective operation of the TF for improving the eligible cost reassessment system.

The union council emphasized, "A representative of the Card Company Labor Union Council must be included in the TF composition," and added, "It must guarantee active support for resolving regulatory arbitrage with big tech and fintech companies, as well as for the sound growth of the card industry through various new business ventures and revenue source development." They warned that if these conditions are not met, they will enter a general strike at any time.

With the union stepping back, the sharp conflict over card fees appears to have been temporarily resolved on the surface. However, there is criticism that the troublesome issue has merely been postponed to the Institutional Improvement TF. It is pointed out as a mere formality to buy time without reaching a conclusion on the abolition of the eligible cost reassessment system, which the union has consistently demanded even before the announcement of the fee reform plan. This is why attention is focused on the Institutional Improvement TF to be operated in the future.

Card fee rates are determined by reviewing eligible costs calculated based on cost analysis. The eligible cost reassessment system has been a continuous basis for additional fee reductions. When card companies reduce personnel and cut consumer benefits to tighten their belts, this is reflected in costs and calculated as the capacity for fee reduction three years later. This cycle, where independent cost-saving efforts lead to fee rate reductions, has been repeating like a broken record since the 2012 amendment of the Specialized Credit Finance Business Act.

There was no reversal this time either. Under the pretext of reducing the burden on small merchants, card fee rates were lowered by up to 0.3 percentage points. The Institutional Improvement TF was presented by financial authorities as a carrot to appease the card industry. However, many inside and outside the industry question the effectiveness of the Institutional Improvement TF. In 2018, a 'Card Industry Stabilization and Competitiveness Enhancement TF' was also formed, but its conclusions fell short of expectations. At that time, financial authorities promised support for entry into data-related businesses for revenue diversification. Things must change now. The vicious cycle that has repeated every three years around card fees must be broken. Effective operation of the Institutional Improvement TF is urgently needed.

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