SK FSC, SK FSS Card Fee Reform Plan

Published on: Dec 19, 2024

On Dec. 17, SK FSC, SK FSS held a meeting with card companies.

  • SK FSC, SK FSS said SK FSC has held a meeting with card firms, to discuss card fee reform measures in 2025, industrial development direction, liquidity/soundness status.
  • Follows SK FSS Aug. 2024 held taskforce meeting to improve card fees, see #223406.
  • Card Fee Reform Measures
  • According to 2024 eligible cost calculation results, the amount of card fee reductions for small and medium-sized card member merchants amounts to KRW 300bn per year.
  • Preferential fee rates will be distributed evenly to 3.05mn small and medium-sized merchants, 40% of KRW 300bn to merchants with annual sales of KRW 300mn or less.
  • 43% to those with annual sales of KRW 300mn-1bn, 17% to those with KRW 1bn-3bn.
  • As a result, credit card fee rates will be lowered by 0.1ppt for those with annual sales of KRW 1bn or less and by 0.05ppt for those with annual sales of KRW 1-3bn; debit card fee rate will be lowered by 0.1ppt for all small and medium-sized merchants.
  • For general merchants with annual sales of less than KRW 100bn whose card fee rate increases along with a rise in eligible costs, the fee rate will be frozen for three years.
  • It was decided to recalculate eligible costs every 6 years instead of every 3 years, but if necessary, eligible costs may be recalculated after reviewing every 3 years.
  • A committee will be formed to review the necessity of recalculating eligible costs.
  • The adjustment of preferential fee rates will be applied from Feb. 14, 2025.
  • Industrial Development Directions
  • SK FSC will revamp the regulatory system centered on physical cards/face-to-face transactions, to fit the digital/AI era with widespread non-face-to-face transactions.
  • Support card firms in bolstering their productive financial role for small merchants/sole proprietors in addition to services for card members like credit sales and card loans.
  • Improve payment stability by implementing regulatory measures on sales practices of secondary and lower payment gateways (PGs) and subsidiary business operators.
  • Liquidity/Soundness
  • SK FSC stressed the importance of market trust in the industry's liquidity/soundness, requested card firms to secure preemptive, sufficient liquidity, improve soundness.
  • SK FSS urged card firms to manage their soundness amid rising card loan handling, while ensuring that the supply of funds to vulnerable borrowers is not reduced.
  • In addition, SK FSS emphasized the need to thoroughly inspect their IT system.
  • in Dec. 2024, SK FSC issued proposal about credit finance supervision, see #238536.
  • On Dec. 27, 2024, FSC proposed rules as part of card fee reform plan, see #238837.
Regulators
SK FSC; SK FSS
Entity Types
Corp; MSB
Reference
Mt, PR, 12/17/2024
Functions
Actuarial and Valuation; Audit; Compliance; Financial; Product Administration; Risk; Sales Practices; Suitability; Technology; Treasury
Countries
South Korea
Category
State
N/A
Products
AI; Cards; Corporate; Loan; Payments; Seniors
Rule Type
Final
Regions
AP
Rule Date
Dec 17, 2024
Effective Date
Feb 14, 2025
Rule ID
237385
Linked to
Reg. Last Update
Dec 17, 2024
Report Section
International