By Kang Seung-woo
The government is considering raising the lower limit of the amount permissible to charge to a credit card. The minimum transaction under consideration is 10,000 won or $8.54.
The introduction of the limit is aimed at addressing grievances of shops and restaurants that have to pay hefty fees. Opposition is quite strong from consumers who claim it is an act of bureaucratic convenience without first having to make credit card firms lower their surcharges.
The Financial Services Commission (FSC) is considering amending a pertinent rule on grounds that card-affiliated shops and restaurants must shoulder a heavy commission burden.
“It is time to consider scrapping or easing the regulations on financial transactions involving very small sums of money,” FSC Chairman Kim Seok-dong said last week during a parliamentary audit and inspection.
The smallest transaction possible might be settled at around 10,000 won, following practices in the United States and Canada, where merchants can reject cards for sales under $10.
According to a current regulation of the Credit Finance Association (CFA), a card affiliate that refuses a credit card transaction faces up to one year in prison or fines of 10 million won.
In the past, the government pushed for credit card use to stimulate the economy and prohibited sellers from rejecting credit cards.
As a result, credit card readers have come into wide use and people use plastic more often than carrying cash.
According to the Bank of Korea (BOK), the number of credit cards reached about 480 million, nearly four times that of 2003, when the central bank introduced the data. In the first half of this year, credit card use amounted to 1.46 trillion won per day, compared with 1.32 trillion won a year earlier.
“More people rely on credit cards for their convenience,” said a Seoul-based economist.
In reality, a credit card transaction costs card affiliates because they have to pay commission and pay for the network.
Sellers complain that they earn nearly nothing after paying card fees for goods worth a few thousand won, insisting the rule forcing them to accept card payments is against the Constitution.
Affiliates recently feel more of a burden because the sagging economy is reducing sales.
“Given that there are few countries that punish those who reject cards, it is reasonable for affiliates to say that,” said an official of the Financial Supervisory Service (FSS).
“In the United States and Canada, if retailers reject cards, they are at a disadvantage with card issuers.”
As for the double price system, it can raise the price of goods, so it was not included on the agenda.