South Korea's eight credit card companies are moving to protest a decision by U.S. industry giant Visa Inc. to increase fees local card users pay for their overseas use, industry sources said Monday.

Last month, Visa informed the local card firms that it has decided to hike fees on six types of overseas services, including overseas settlements. The decision also calls for a rise in commissions the South Korean firms pay to Visa.


The fee increase, however, doesn't apply to credit card holders in Japan and China, according to the sources.

"A formal protest letter will be sent as early as this week," an industry source said. "The card companies plan to complain that the fee increase will raise the burden of local card users."

The Korean card companies will also challenge the current rate-setting system, the sources said. Currently, South Korean credit card companies are forced to pay fees in line with a rate table unilaterally set by the world's leading credit card issuer.

Market watchers said it remains to be seen whether Visa will cancel the fee hike in response to the South Korean card issuers' protests.

In 2009, Visa sought to increase the overseas use fee for South Korean card holders to 1.2 percent from 1 percent, but it was forced to back down in the face of strong protest from local card firms, which threatened to suspend the issuance of Visa cards. Visa caved in out of concern over a drop in market share in South Korea.

Visa, however, will be unlikely to give ground this time as it is in dire need of cash following last year's big-budget takeover of its former European subsidiary, according to some analysts.

"Visa is trying to jack up fees by taking advantage of its dominant market position," an industry source said. "Local card companies should seek additional countermeasures on top of sending a protest letter." (Yonhap)