By Jhoo Dong-chan
Credit card companies have decided to file a complaint with the Fair Trade Commission (FTC) against Chinese UnionPay for unilaterally raising its foreign transaction fees.
The domestic card firms have paid the Chinese card payment firm the fees on behalf of Korean customers, but decided to bring the case to the FTC after UnionPay raised its transaction fees from 0.6 percent to 0.8 percent last year.
In a bid to expand its market presence, UnionPay had exempted domestic card users from fees when it first entered the Korean market. However, it has raised the foreign transaction fees since an increasing number of Korean customers started using it for cross-border shopping.
“Visa also recently raised foreign transaction fees. Now, UnionPay raised the fees only in Korea,” said a Hyundai Card official.
“There is no international payment firm in Korea. Korean customers have no option but to use international firms such as MasterCard, Visa and UnionPay. Without leverage to control their unilateral fee policy, they are likely to take advantage of Korean customers.”
Domestic card firms, including KB Kookmin, Lotte, Shinhan, Samsung, Woori and Hyundai Card, reportedly protested UnionPay's decision last year, but the Chinese firm pushed ahead regardless.
They also filed a complaint with the FTC against Visa for the same reason _ the case is currently being reviewed. The inspection results are scheduled to be released next month.
Domestic card companies said they will bring the UnionPay case to the FTC as soon as the results come out.
“They changed their stance as nearly 30 million UnionPay cards have been issued in Korea,” said an industry observer.
“Domestic credit card firms are experiencing difficulties in sales as more Korean customers buy products directly from overseas markets.”
These firms said they will also review their plan to stop paying the fees for customers.
“UnionPay's decision will burden Korean customers. If they continue exercising the unfair practice in Korea, it will discourage customers' purchasing morale and eventually hamper their sales in the long term,” the observer added.
Established in March 2002, UnionPay is the world's largest card payment organization based on payment transactions, plans and number of cards issued, ahead of Visa and MasterCard.