One of South Korea’s major card issuers faces a boycott beginning April 1 from the country’s large small-retailer segment upset over the institution favoring a larger retailer with a much lower card-acceptance fee.
Small Korean retailers have asked Samsung Card Co. Ltd. to cut its merchant transaction fees or face a market boycott, a spokesperson for the Korean Small Merchants Association tells PaymentsSource.
“Our association is 2 million strong, and we will stop accepting Samsung Card payments from consumers beginning next month,” he says. “Samsung has to cut fees as well as stop offering exclusive benefits to Costco Wholesale Korea.”
Merchant transaction fees have been a hot topic in Korea for the past year. In October, most card issuers said they would reduce the fees they collect from such merchants (see story).
The surge in merchant protests also has resulted in a parliamentary 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. However, the country’s finance ministry and the regulator both have strongly opposed such action (see story).
Last fall, Samsung announced it would reduce its merchant transaction-fee rate to 1.8% from 2.05% of the sale. The association is demanding that the card issuer cut the service fee to 1.5%, the spokesperson adds.
“We are being charged 1.8%, while Samsung continues to charge Costco’s Korean unit a fee of only 0.7%,” she says. “The boycott will continue until the card issuer ends the exclusive contract with Costco.”
Samsung Card declined to comment on the issue.
What do you think about this? Send us your feedback. Click Here.