SEOUL, Feb. 13 (Korea Bizwire) — South Korea’s credit card firms paid nearly 200 billion won (US$180.6 million) in fees to global credit card brands last year, virtually unchanged from the year before due to increased spending during overseas travel and online purchases from foreign shopping malls, a report said Friday.
Local card issuers, led by market No. 1 Shinhan Card Co., paid 194 billion won in commission in 2014 in exchange for using global credit card networks, such as Visa Inc. and Mastercard Inc., the report compiled by KB Financial Group Inc. said.
The total amount is 5 percent less than the record 204.1 billion won in 2013, but such decline was overshadowed by an increase in fees for overseas settlements, the report showed.
By rule, foreign firms take 0.04 percent on domestic purchases made on credit cards that carry their brand name. The fee on overseas use is approximately 0.2 percent.
The report said local credit card firms paid 106.2 billion won for domestic use, a 15 percent drop.
But a total of 31.6 billion won in fees was given to foreign brands for overseas spending, up 7 percent on-year from 29.5 billion won, the report showed. It marks a 150 percent surge from 12.4 billion won in 2010.
“South Korean financial authorities have encouraged local card firms to issue domestic-only cards in order to reduce commission fees,” the KB Financial report said, but such measures were outdone by overseas spending.
Customs statistics show South Koreans bought $10.5 billion worth of goods by credit or debit cards in foreign countries in 2013, compared with 5.3 billion won in 2009.
Direct online purchases from shops abroad reached an all-time annual high of $1.54 billion in 2014, up 39 percent from $1.04 billion a year ago, according to the data.