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Company attacked for offering exclusive benefits to Costco in service fees
About two million retailers nationwide are poised to boycott consumers’ payments via Samsung Card from next month.
They demand the nation’s third-largest credit card issuer cut settlement service charges on retailers and cease offering exclusive benefits to Costco Wholesale Korea, a large discount chain.
The association, composed of small- and mid-sized retailers, demanded the card issuer cut the service fee to 1.5 percent of each payment, from the current charge of around 1.8 percent.
Though Samsung Card has decided to inch down the rate to 1.8 percent, the rate on retailers charged by Samsung Card has hovered above 2 percent over the past few years.
Samsung has been the target of retailers’ protests as it has been charging Costco’s Korean unit a service fee of 0.7 percent.
Association head Oh Ho-seok was quoted by an online news provider as saying, “We, composed of two million businesses, will stage a boycott campaign against Samsung Card from April 1.”
He also reportedly said that the boycott will continue until the card issuer ends the exclusive contract with Costco.
As the two million retailers account for about 90 percent of Samsung Card’s member stores nationwide, their planned boycott could severely damage the company’s earnings.
Korea’s major credit card firms have been applying favorable settlement service fees to only large retail chains, while charging a regular fee for smaller players.
Last month Shinhan Card, the nation’s No. 1 credit card issuer, accepted the similar demands of a million retailers after they threatened to boycott Shinhan cardholders’ payments.
Small and mid-sized businesses began expanding their protest against major credit card firms in the latter half of 2011, criticizing the card industry’s lukewarm attitude toward cutting charges.
Last year, tens of thousands of restaurant owners gathered in Olympic Stadium in southeastern Seoul for a much-publicized rally, demanding the rates be slashed further to 1.5 percent.
Credit card companies earn nearly half of their total income in commission from member merchants. Last year, they raked in a combined net profit of about 2 trillion won, the highest in history.
Though Koreans are not joining the Occupy Wall Street demonstrations in huge numbers, public anger is palpable over financial firm executives’ hefty salaries and generous dividend payouts.
Meanwhile, a revision of the Credit Finance Business Act allows financial authorities to set the rates of credit card service fees charged on retailers.
The bill has been pushed by a large number of ruling and opposition lawmakers.
By Kim Yon-se (kys@heraldcorp.com)
About two million retailers nationwide are poised to boycott consumers’ payments via Samsung Card from next month.
They demand the nation’s third-largest credit card issuer cut settlement service charges on retailers and cease offering exclusive benefits to Costco Wholesale Korea, a large discount chain.
The association, composed of small- and mid-sized retailers, demanded the card issuer cut the service fee to 1.5 percent of each payment, from the current charge of around 1.8 percent.
Though Samsung Card has decided to inch down the rate to 1.8 percent, the rate on retailers charged by Samsung Card has hovered above 2 percent over the past few years.
Samsung has been the target of retailers’ protests as it has been charging Costco’s Korean unit a service fee of 0.7 percent.
Association head Oh Ho-seok was quoted by an online news provider as saying, “We, composed of two million businesses, will stage a boycott campaign against Samsung Card from April 1.”
He also reportedly said that the boycott will continue until the card issuer ends the exclusive contract with Costco.
As the two million retailers account for about 90 percent of Samsung Card’s member stores nationwide, their planned boycott could severely damage the company’s earnings.
Korea’s major credit card firms have been applying favorable settlement service fees to only large retail chains, while charging a regular fee for smaller players.
Last month Shinhan Card, the nation’s No. 1 credit card issuer, accepted the similar demands of a million retailers after they threatened to boycott Shinhan cardholders’ payments.
Small and mid-sized businesses began expanding their protest against major credit card firms in the latter half of 2011, criticizing the card industry’s lukewarm attitude toward cutting charges.
Last year, tens of thousands of restaurant owners gathered in Olympic Stadium in southeastern Seoul for a much-publicized rally, demanding the rates be slashed further to 1.5 percent.
Credit card companies earn nearly half of their total income in commission from member merchants. Last year, they raked in a combined net profit of about 2 trillion won, the highest in history.
Though Koreans are not joining the Occupy Wall Street demonstrations in huge numbers, public anger is palpable over financial firm executives’ hefty salaries and generous dividend payouts.
Meanwhile, a revision of the Credit Finance Business Act allows financial authorities to set the rates of credit card service fees charged on retailers.
The bill has been pushed by a large number of ruling and opposition lawmakers.
By Kim Yon-se (kys@heraldcorp.com)
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Articles by Korea Herald
