Schools refuse to accept tuition by credit card

By Kang Seung-woo

A large number of colleges are refusing credit card payments for tuition due to the high commission they are charged, industry data showed Monday.

According to the credit card sector, only 72 of about 410 colleges across the nation, or 17.5 percent, allowed their students to swipe cards to pay tuition for the first semester of this year.

Although the figure was up from last year’s 14 percent, it is not enough to meet the government’s target range, which plans to expand the system.

Shinhan Card, the nation’s largest plastic issuer, saw the number of colleges that willing to accept cards decline by two to seven.

“As some colleges demanded ridiculously low fees, the number of subscribing schools fell. As we have to avoid losses, it is often tough to reach agreements with colleges,” said a Shinhan Card official.

Lotte Card and Hyundai Card have only one affiliated school apiece.

Samsung Card and BC Card boast of a large number of affiliates.

Samsung, which signed agreements with 12 schools last year, has extended the number to 22 including Konkuk University and Sungkyunkwan University.

As for BC, it had 34 colleges under contract, including Yonsei University, Chung-Ang University and Busan University and it has extended the number to 35 this year after adding Changwon University.

KB Card, which spun off from KB Financial Group last year, has beefed up its affiliated units by including 10 more colleges to make 16 this year.

As part of efforts to ease the economic burden on households, the government has encouraged local colleges including private universities to receive tuition through credit card payment but only a few are following the policy, citing high commission.

The credit card system is gaining popularity as households can pay tuition of 4 to 5 million won per semester by monthly installments for up to one year.

However, a discord between schools and the card industry on swipe fees prevents the system from gaining greater momentum.

Credit card firms want their commission to be around 1 to 1.5 percent, compared with 2 to 3 percent imposed on other merchants.

However, schools prefer cash for tuition given that their hundreds of billions of won in credit card transactions translates to multi-million won commission.

“Card companies are trying to explore a new market in college tuition but schools are averse to negotiate on commission, which discourages the government’s drive for tuition payment using credit cards,” said a card industry official.