"Kiosk Fees Not Properly Disclosed"... Small Business Ombudsman Holds Platform Fee Meeting

Self-Employed Business Owners Raise Concerns Over Platform Fee Information Asymmetry
Call for Standard Contracts and Fee Confirmation Signing Procedures

Self-employed business owners who are struggling with the burden of platform fees, such as those for kiosks and delivery apps, have called on the government and platform companies to come up with countermeasures.

At the on-site meeting for platform commission-related associations held at the Korea Rest Food Business Association in Gwanak-gu, Seoul, Seungjae Choi, Ombudsman for Small and Medium Enterprises (center), is leading the discussion. Ombudsman for Small and Medium Enterprises

The Ombudsman for Small and Medium Enterprises announced that on the afternoon of April 21, a "meeting of industry associations on platform fees" was held at the Korea Rest Area Food Industry Central Association in Gwanak-gu, Seoul.

The meeting was attended by Seungjae Choi, Ombudsman for Small and Medium Enterprises, Daehyun Park, Director of Trend Analysis at the Korea Small Enterprise and Market Service, Youngsun Cho, President of the Korea Rest Area Food Industry Central Association, Gisuk Kyung, President of the Korea Coin Karaoke Association, and 15 restaurant small business owners.

The associations pointed out that kiosk payment fees are higher than traditional card fees, yet this is not properly disclosed and there is a lack of adequate guidance on fee rates.

Youngsun Cho, President of the Korea Rest Area Food Industry Central Association, stated, "Even in the rapidly growing kiosk and table order market, payment gateway (PG) fees are being charged at much higher rates than traditional card fees (0.5–1.5%), but these are not properly disclosed at the time of contract, and in the event of early termination, penalty fees of several million won are being imposed."

The Korea Coin Karaoke Association noted, "As coin karaoke rooms rapidly expand and more kiosks are being installed, it has become difficult to determine the fee rates for alternative payment methods such as simple payments and micropayments, in addition to physical cards. Business owners face a severe information asymmetry, making it nearly impossible to compare fees between providers when signing kiosk contracts."

Related organizations suggested that, in order to resolve these issues, information such as payment fee rates, settlement cycles, and incidental costs should be specified in standard contracts, and that a fee confirmation signing process should be introduced.

Restaurant owners expressed their difficulties, saying that the increase in quasi-fixed costs such as advertising expenses on delivery apps, combined with rising prices for packaging materials such as delivery containers, has substantially increased their cost burden.

The owner of a delivery restaurant, referred to as "A," said, "A significant portion of orders come through delivery apps, and in addition to the delivery app’s intermediary fee, payment fees, delivery charges, and advertising expenses are combined, resulting in a real cost burden of about 30% of sales. Spending to secure ad exposure has become an 'essential quasi-fixed cost' for business operations, so even if sales increase, profitability remains stagnant, leading to a 'reverse profit structure.'"

He continued, "As platform costs increase, many businesses are forced to create separate menus with delivery prices set higher than in-store prices, operating under a dual pricing system. In addition, we have received notices of packaging material price increases of up to 40%, resulting in a cost burden that has pushed management to its limits. Due to the nature of the dining industry, raising prices leads to severe customer attrition, making it very difficult to pass these increased costs on to consumers."

Ombudsman Seungjae Choi stated, "Platform costs are structured as a complex combination of intermediary fees, payment fees, advertising and exposure costs, delivery charges, and subscription fees. I fully understand that the actual cost burden felt by small businesses is accumulating structurally. We will work to ease the excessive dependence of small businesses on platforms and to ensure greater management autonomy for small business owners."

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