Carriers may face legal action
By Kim Tae-jong
The nation’s financial regulator is considering taking legal action against three mobile carriers for continuously opposing demands by credit card firms to pay more in transaction fees.
The carriers claim the service charge should be 1.5 percent, the lowest allowed and lower than the market average, while card firms have demanded rates of 1.85 to 1.89 percent.
According to the Financial Supervisory Service (FSS), it will soon launch a probe into SK Telecom, KT and LG Uplus to see whether they are violating the revised Credit Finance Law.
“We will investigate the three mobile carriers because they have unfairly opposed the increase in transaction fees,” an FSS official said. “If they are found to have abused their dominant market position to oppose the revised law and suppress credit card firms, we will take legal action.”
By law, heads of companies or store owners can be subject to one-year’s imprisonment or a fine of up to 10 million won if they are found to pay transaction fees that are deemed too low by abusing a dominant position.
In addition to seeking criminal charges against the mobile carriers if they are found to have abused their market position, the FSS also plans to pass the case to the Fair Trade Commission.
In response, the mobile carriers have threatened to raise fees for their customers if they are required to pay more for credit card transactions.
In a joint statement, SKT, KT and LG said they cannot afford a raise in the transaction fees, citing they would have to pay an additional 38.5 billion won, 32.9 billion won and 14.4 billion won, respectively, which would inevitably involve an increase in mobile bills.
“We haven’t received any data to show how the current transaction fees are calculated,” an official from SKT said. “It’s too high given the characteristics of our business and it’s not a reasonable level. That’s why we want to adjust the rates.”
But the financial authorities believe that any additional financial burden would be just less than 2 percent of the carriers’ operating profits, given that they stood at a combined 4.4 trillion won in 2011. It also said they can afford the increase by cutting unnecessary costs such as the excessive subsidies spent on attracting customers.
The government has revised the Credit Finance Law to help support small- and medium-sized businesses as well as customers by basically lowering the average credit card transaction rate to 1.5 percent from the current 2.09 percent by leveling varying charges.
Previously, credit card firms applied favorable transaction fees to large retail chains and big companies due to their dominant market position, while charging a regular fee for small players, a discriminative practice that drew criticism from merchants.