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The Financial Services Commission said Monday that it is considering allowing businesses to reject credit cards for small payments.
The potential upper limit would be 10,000 won ($8.55) similar to the United States and Canada, which impose a $10 cap, the nation’s top financial regulator said.
“This is a time to consider abolishing or easing the ban on the refusal of micro credit card payments,” FSC chief Kim Seok-dong said during a parliamentary inspection on Friday.
Along with the new measure for “micro credit card payment,” the FSC said it will complete its reform bill of the credit card industry within the year.
Under the current law on credit finance, businesses are banned from refusing credit card payment regardless of product prices and violators can be punished with one-year imprisonment or fines of up to 10 million won.
However, smaller businesses have long demanded a revision to the law, complaining about the high commission fees that they have to pay to credit card firms.
Until recently, the Korean government has encouraged the use of credit cards to secure more taxes and making transaction flow more transparent.
During the years, the number of transactions paid with credit card here has more than tripled from 130 million in 2003 to 480 million in July, according to Bank of Korea data.
Despite the improved convenience for consumers, the amount of commission fees charged by businesses, especially small restaurant owners and merchants, has surged over the years.
Coupled with the recent signs of economic slowdown, they are more concerned about increasing commission fees and slowing sales.
“Some people file complaints for being rejected to pay products worth less than 1,000 won with credit card at convenience store. Consumers may prefer to use a credit card as they don’t need to carry coins and can get tax deductions,” said a FSC official.
“There are few countries that impose criminal charges for the refusal of credit card payment. In cases of the United States and Canada, violators face disadvantages from credit card firms,” the official said.
With related revision bills already submitted to the National Assembly, the FSC expected related discussions could be completed within the year.
However, consumers and credit card firms were skeptical about the effectiveness of the pending revision.
“Consumption pattern of Koreans has already changed. I don’t understand why the government is trying to turn it back,” said Lee Min-kyu, a 35-year-old office worker.
Lee, who often pays for cheaper items or taxi fares with credit card, said he would not visit smaller businesses if they refuse credit card payment and that could lead to a further decline in their sales.
A credit card official also said: “Most stores have a credit card payment machine nowadays. I have doubts if they can refuse the demand of consumers.”
By Lee Ji-yoon (jylee@heraldcorp.com)
The potential upper limit would be 10,000 won ($8.55) similar to the United States and Canada, which impose a $10 cap, the nation’s top financial regulator said.
“This is a time to consider abolishing or easing the ban on the refusal of micro credit card payments,” FSC chief Kim Seok-dong said during a parliamentary inspection on Friday.
Along with the new measure for “micro credit card payment,” the FSC said it will complete its reform bill of the credit card industry within the year.
Under the current law on credit finance, businesses are banned from refusing credit card payment regardless of product prices and violators can be punished with one-year imprisonment or fines of up to 10 million won.
However, smaller businesses have long demanded a revision to the law, complaining about the high commission fees that they have to pay to credit card firms.
Until recently, the Korean government has encouraged the use of credit cards to secure more taxes and making transaction flow more transparent.
During the years, the number of transactions paid with credit card here has more than tripled from 130 million in 2003 to 480 million in July, according to Bank of Korea data.
Despite the improved convenience for consumers, the amount of commission fees charged by businesses, especially small restaurant owners and merchants, has surged over the years.
Coupled with the recent signs of economic slowdown, they are more concerned about increasing commission fees and slowing sales.
“Some people file complaints for being rejected to pay products worth less than 1,000 won with credit card at convenience store. Consumers may prefer to use a credit card as they don’t need to carry coins and can get tax deductions,” said a FSC official.
“There are few countries that impose criminal charges for the refusal of credit card payment. In cases of the United States and Canada, violators face disadvantages from credit card firms,” the official said.
With related revision bills already submitted to the National Assembly, the FSC expected related discussions could be completed within the year.
However, consumers and credit card firms were skeptical about the effectiveness of the pending revision.
“Consumption pattern of Koreans has already changed. I don’t understand why the government is trying to turn it back,” said Lee Min-kyu, a 35-year-old office worker.
Lee, who often pays for cheaper items or taxi fares with credit card, said he would not visit smaller businesses if they refuse credit card payment and that could lead to a further decline in their sales.
A credit card official also said: “Most stores have a credit card payment machine nowadays. I have doubts if they can refuse the demand of consumers.”
By Lee Ji-yoon (jylee@heraldcorp.com)
