By Kang Seung-woo
Commissions on the use of check cards paid by affiliates will be lowered from this month.
According to card firms, the fee imposed on affiliates whose annual sales are 960 million won or less will fall from 2.1 percent to less than 1 percent.
However, it remains to be seen whether the savings will be passed on to the card users.
Bigger franchises will benefit a 0.6 percentage point reduction, with the commission reset at below 1.7 percent. For banks’ card units, the commission will be lowered to less than 1.5 percent.
The move comes as it has been pointed out that as people can only spend money that is in their accounts and there is no cost for financing or risk of delinquency, the commission should be slashed.
Currently, card companies and lenders’ card arms impose almost the same fee on check card users as for credit cards.
The commission cut is expected to help the affiliates save more than 200 billion won ($177.2 million) annually.
Check cards are gaining popularity as they appeal to consumers with a variety of merits.
They have not drawn as much attention as in other nations. In Europe, the market share of check cards has reached 60.4 percent and that of the United States stands at 40.7 percent, while Korea sees a 9 percent use.
However, the market for check cards has been on an upswing of late.
In 2004, the spending on such cards was at 2.6 trillion won, but last year, it rose sharply to 51.8 trillion won.
Observers say that using the cards would enable them to maintain a good habit of spending.
“Check cards help customers spend money within their capabilities, so they refrain from overconsumption,” said a Seoul-based economist.
Check card holders can get more tax refunds than those paying by credit cards.
The tax refund rate for check cards in the year-end tax adjustment is 25 percent, while that for a credit card is 20 percent.
In addition users can enjoy as many additional services as credit card holders.
Discounts are offered to card holders making transactions in multiple places such as restaurants, theaters and shopping malls.