By Kim Tong-hyung
First it was the restaurant owners that called out credit card companies for their ``excessive’’ transaction fees and now gas station operators are following suit.
Inspired by thousands of their food-and-beverage comrades shouting slogans at the Jamsil Olympic stadium in southern Seoul, Tuesday, members of the Korea Gas Station Association (KOSA) plan to hold their own rally in front of the Gwacheon Government Complex, Thursday, to add pressure on credit card firms to lower fees. The group is expecting more than 1,500 gas station owners to participate in the protest.
``Gas stations barely manage profit margins of 5 to 6 percent, so the 1.5 percent commission credit card companies take is excessive, considering that we are in a business where a larger number of customers pay with plastic,’’ said a KOSA representative.
``When oil prices go up, as they have been this year, credit card companies make a killing on the higher revenue from transaction fees. However, gas stations are stuck between a decline in consumption and higher commission payment to credit card companies.’’
KOSA also plans to attack the government’s anti-inflation measures, including promoting more independent stations and allowing discount retailers like E-Mart to operate their own filling stations, which they say are threatening existing businesses.
Credit card firms appear to be on course for a very lucrative 2011, displaying an ability to thrive in a depressing economy battered by a double-whammy of higher prices and slow growth.
According to the Financial Supervisory Service (FSS), the companies are on pace to shatter their old records in annual profit this year after earning nearly 5 trillion won in transaction fees from businesses during the first half of the year, up 18.6 percent from the same period last year.
Credit card firms are also having a blast by ramping up charges for people withdrawing money from a cash point.
According to official figures, credit card companies combined for 679.8 billion won on charges from cash withdrawals alone during the first six months of the year, representing a 277.3 billion won increase from the same period last year. This has consumer experts accusing the companies of profiteering and cautioning people against using credit cards to withdraw cash. But some borrowers have no other option as the sluggish economy continues to drive them toward desperation.
Credit card firms are also witnessing their thriving business being converted into a public-relations crisis. Small shop owners, who accounted for most of people at Jamsil Tuesday and probably those planning to show up at Gwacheon Thursday, are angered by the fact that credit card companies have been providing more favorable rates to large retailers when they are charged regulator fees of around 2 percent.
Such inconsistency in transaction fees had financial regulators considering allowing shops to reject credit card payments of less than 10,000 won (about $8.7). However, they scrapped the idea after shop owners took it as an insult to injury, expressing concerns that such policies will have credit-crunched consumers spending even less.
Credit card firms are showing signs of yielding to public pressure. The country’s largest credit card issuers, including Shinhan, KB, Samsung, BC and Hana-SK, recently said they will be lowering transaction fees imposed on small businesses like restaurants, florists and beauty shops, to the level charged to bigger businesses.
This means that these small shop owners will be paying commissions of around 1.6 to 1.8 percent rather than their current 2 percent-plus. KB, Hyundai, Samsung and BC said they will change their rates by the end of the year, while Shinhan and Hana SK are considering to do so in January.