SEOUL, May 19 (Korea Bizwire) - The reduction of transaction fees charged by Visa Card and MasterCard to domestic credit card companies sought by the financial authorities of Korea is likely to be postponed to the next year, Yonhap News reported on May 18.
Earlier in November last year, Korea’s Financial Services Commission and Financial Supervisory Service announced that they would strongly urge domestic card issuers to renegotiate the terms of annual fees and transaction fees paid to international card companies as these are excessive.
To this decision, American card companies such as Visa and MasterCard vehemently protested and even threatened to resort to a settlement mechanism under the Korea-U.S. free trade agreement to resolve the issue. Currently the issue has left the bailiwick of the regulators and is taken care of exclusively by the Credit Finance Association.
Under the present arrangement, domestic card companies using international credit card logos must pay 0.2-1.0 percent of fees for every overseas transaction and 0.04 percent for even domestic transactions.
Last year, the fee payments made by Korean card companies were 135 billion won. The financial regulators considered that charging fees for domestic transactions is unfair and that was why they had set out to reform the scheme in the first place.
Written by Sean Chung (firstname.lastname@example.org)