A move to revise the Credit Finance Business Act and allow South Korea’s financial regulator to set the commission rates card firms collect from merchants has met with strong opposition.
The National Policy Committee of Korea on Feb. 10 proposed revising the law. The committee is made up of lawmakers both in the ruling government and opposition.
Both the Korean finance ministry and credit card companies came out strongly against the move, which would authorize the Financial Services Commission to set the commission rates.
“The revision goes against the constitution and against competitive free-market rules,” a spokesperson for the Credit Finance Association of Korea tells PaymentsSource, saying the organization would fight the move in court.
The association is an umbrella organization representing all credit card companies, insurers and card-issuing banks in South Korea.
The ruling government also opposed any such move, claiming in a statement issued by the Ministry of Finance that, as the ruling party, it would not let such a measure pass. The assembly can pass the bill by a majority vote, regardless of party affiliation to the government or opposition.
Interestingly, even the Financial Services Commission is opposed to the proposed bill, saying that the government should not set prices in the private sector.
“Commission rates for small merchants should be voluntarily decided by credit card firms,” Commission Chief Kim Seok-dong said in a statement. “Making the government set the commission rates goes against market principles.”
The committee’s move follows disputes last year that forced a reduction in the commission rates for small merchants after criticism that the rates were higher than those applied to larger enterprises (see story).
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