Financial Authorities to Shorten Payment Cycle by One Day for Small Franchisees

Discussion on the Reassessment Cycle of Eligible Costs Will Take Place at Year-End

Financial authorities will shorten the payment cycle for small and medium-sized merchants by one day. Currently, the payment cycle, which is operated on a partial and temporary basis as 'transaction slip purchase date + 2 business days,' will be uniformly shortened to 'transaction slip purchase date + 1 business day.' They also plan to encourage shortening the cycle for general merchants.

On the afternoon of the 20th, the Financial Services Commission and the Financial Supervisory Service announced these credit card industry-related system improvement measures through the 'Card Fee Eligible Cost System Improvement TF' meeting.

The eligible cost calculation cycle remains unchanged... "Discussion at year-end"

In this meeting, the reform of the credit card eligible cost calculation cycle, which has been discussed for several years, was not implemented. A financial authority official stated, "We plan to review the possibility of reducing eligible costs and the capacity to absorb them through the eligible cost recalculation process at the end of the year and make a decision." The card industry has been requesting to extend the fee recalculation cycle from the current 3 years to 5 years, citing deteriorating profitability.

Instead, financial authorities decided to recognize part of the card companies' proactive liquidity procurement costs as eligible costs to shorten the payment cycle. For sales with a shortened payment cycle, the cost of funds will be recognized from the transaction slip purchase date.

Establishing the 'Credit Card Industry Win-Win and Development TF' in the second half of the year

Financial authorities also proposed measures to enhance the objection procedure for merchant fee rates, improve the selection criteria for special merchants, and expand the integrated card information management service. Currently, when card companies increase the fee rate for general merchants, they notify only the fee rate increase without providing reasons or separate guidance on objections. Going forward, they must explain the reasons for the fee rate increase and establish a separate objection channel (by setting up a dedicated department), and the results of the objection review must be submitted to the Korea Credit Finance Association.

The selection criteria for special merchants, which have been criticized as somewhat ambiguous, will also be clarified to prevent the special merchant system from leading to preferential treatment for some large merchants. According to the current Credit Finance Business Supervision Regulations, credit card merchants providing goods or services with public nature can have their eligible costs adjusted by deduction, but the criteria are unclear, leading to concerns that card companies might arbitrarily expand interpretations. The 'My Card at a Glance' service operated by the Korea Financial Telecommunications & Clearings Institute will introduce a dormant card management service.

Additionally, by promoting digital transformation in the card industry, the high-cost transaction structure will be improved to reduce card companies' eligible costs and lessen the cost burden on stakeholders such as merchants. Costs will be reduced through measures such as issuing electronic statements of usage, converting printed transaction slips and simple informational messages to mobile messages upon customer request, and reducing general administrative expenses.

Furthermore, financial authorities are reviewing the adjustment of usage limits for minors' check cards and postpaid transportation cards to strengthen competitiveness in the credit card industry. They are also pursuing system improvement measures to address regulatory blind spots and enhance payment stability, such as exploring regulatory measures for secondary and lower-tier payment gateways (PG) and sub-merchants, which were problematic in the TMON and WEMAKEPRICE incidents.

A financial authority official explained, "▲ We will promptly and sequentially implement system improvement measures within the year to enhance merchant rights and consumer benefits and improve the high-cost structure, and ▲ we will establish a separate TF to prepare measures for building a win-win foundation and strengthening competitiveness in the credit card industry."

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