Yoon Seok-yeol's 'Heartthrob' Promise Leaves Mobile Payment Companies 'Worried'

Yoon Seok-yeol, the People Power Party's presidential candidate Photo by Yonhap News

[Asia Economy Reporter Bu Aeri] As voices emerge in the political sphere to regulate the fees of big tech companies such as Naver Pay and Kakao Pay, these companies are showing signs of distress. Big tech firms argue that populist pledges are being made without a detailed understanding of the industry's nuances.

On the 10th, according to sources in politics and finance, Yoon Seok-yeol, the presidential candidate of the People Power Party, stated through his "Seokyul's Heart-throbbing Promise" the day before, "We will minimize the burden of simple payment fees applied to small business owners," adding, "In accordance with the principle of 'same function, same regulation' for regulating big tech financial businesses, we plan to set compliance requirements for simple payment fees similar to those for credit cards." Candidate Yoon claimed, "The payment fees of big tech companies are up to three times higher than credit card payment fees."

This claim has been raised and continuously debated since last year within the card industry. According to the standards applied from the 31st of last month, card companies' merchant fees range from 0.5% to 2.3%, while big tech 'Pay' payment fees range from 0.9% to 3.3%. Although a simple numerical comparison makes the fees appear several times higher, industry insiders point out that comparing these two fees itself is a mistake.

Comparing card fees and Pay fees is akin to comparing the price of raw potatoes to processed French fries. Since they do not have the 'same function' to begin with, and given that big tech companies handle payment agency services for small businesses that card companies do not, the claim that they have increased the burden on small business owners is unfair, according to big tech companies.

For example, the Naver Pay fee, which is claimed to be three times higher than card companies, is divided into 'order management fees (1.8% to 3.3%)' and 'payment-type fees (0.9% to 2.5%).' The order management fee includes fees for functions such as delivery, settlement, and customer consultation used by small business owners on Naver's online shopping mall, Smart Store. The payment-type fee is the payment agency fee charged when payments are made via Naver Pay on external online shopping malls. Moreover, these two types of fees include fees paid to card companies. In other words, comparing the merchant fees of card companies, which are raw materials, with Pay fees that add processing costs to the raw materials is fundamentally erroneous. In the case of payment-type fees, excluding the fees paid to card companies, the actual fee Naver takes is about 0.2% to 0.3%. This is also true for Kakao Pay and others.

A Pay industry official said, "The fees mentioned by the card industry apply only to payment functions at offline merchants, so they inevitably differ from the integrated management fee concept of Pay simple payment fees in online commerce. In fact, the card companies' shopping mall fees correspond to the same function."

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