This undated file photo shows scooters parked at a center for the food delivery platform Baemin. (Image courtesy of Yonhap)
SEOUL, Jan. 22 (Korea Bizwire) — With just one month remaining until South Korea’s much-debated delivery fee reform takes effect, questions over its effectiveness are growing.
Opposition from franchise operators and the rise of “dual pricing” systems among small business owners are fueling concerns that the reform could exacerbate, rather than resolve, industry tensions. Critics argue that the current voluntary fee structure imposed by delivery platforms places undue financial burdens on small businesses and ultimately shifts costs onto consumers.
The delivery fee reform, first introduced in November 2024, aims to create a fairer system by adjusting commission rates based on transaction volume. Currently set at 9.8%, commission fees under the new plan would range from 2% to 7.8%, with delivery charges also scaled to transaction size. Major platforms like Baedal Minjok and Coupang Eats plan to implement these changes in February 2025.
Pushback from Franchise Operators
Franchise businesses, particularly those with high delivery sales, have expressed dissatisfaction with the reform. They argue that the changes fail to address existing issues and, in some cases, increase costs. For example, delivery fees for the top 50% of high-transaction franchisees will rise by 200 to 500 won per order under the new system.
“The reform process excluded meaningful input from the food service industry,” one franchise representative said. “The tiered commission system could worsen conflicts rather than resolve them.”
Expansion of Dual Pricing Systems
As the reform’s implementation approaches, dual pricing—where delivery menu prices are higher than in-store prices—is becoming more widespread among small business owners, a practice already adopted by major chains like Baskin-Robbins, Lotteria, and KFC. For many small operators, dual pricing is seen as a necessary measure to offset the financial strain caused by platform fees and delivery costs.
While dual pricing helps business owners manage their expenses, it has drawn criticism for burdening consumers with higher prices. Many customers remain unaware of the price disparity, despite some platforms displaying disclaimers about delivery price differences. Enforcement of these disclosures is inconsistent, with platforms lacking the authority to monitor or penalize non-compliance.
Calls for Greater Regulation and Transparency
Experts argue that the complexity of delivery fee structures and the lack of transparency create asymmetrical cost burdens for platform operators, business owners, and consumers.
“Consumers are not adequately informed about delivery fees or pricing structures, leading to additional search and opportunity costs,” said Lee Young-ae, a consumer studies professor at Incheon National University.
To address these issues, some suggest mandatory transparency in commission and pricing structures, alongside stricter regulation of platform operators. The Korea Consumer Agency has recommended that delivery platforms clearly indicate price differences during the ordering process, but compliance remains spotty, with no legal enforcement mechanism in place.
Finding a Path Forward
Critics warn of a “balloon effect,” where financial pressures shift from one group to another without addressing the root cause. “A transparent pricing structure is essential to reducing the burden on both consumers and business owners,” Professor Lee emphasized. “Regulatory measures targeting platform operators must be established to ensure a fairer ecosystem.”
As South Korea grapples with the complexities of its delivery fee system, industry stakeholders are calling for stronger legislative oversight and clearer policies to balance the interests of platforms, businesses, and consumers alike.
M. H. Lee (mhlee@koreabizwire.com)
