The Financial Supervisory Service will dispatch inspectors to the headquarters of seven major credit card firms next week, in a bid to find out whether they charged retailers irregular service fees.
“Starting on Jan. 21, the investigation into the overall credit card industry will be carried out over the next three weeks,” an FSS official said on Thursday.
He said the financial regulator had demanded the seven issuers to tender a variety of documents on the card transaction fees on retailers before this weekend.
The seven firms are Shinhan Card, BC Card, KB Kookmin Card, Hyundai Card, Samsung Card, Lotte Card and Hana SK Card.
While the transaction service charge system was recently overhauled, there are allegations that some firms engaged in behind-the-scenes deals with large retailers, he said.
Under revised regulatory rules, credit card firms have been instructed to cut fees for small retailers and raise fees on large firms. But some big retailers are suspected of enjoying low service charge rates via exclusive benefits offered by card issuers, according to market observers.
The FSS also plans to investigate whether they slashed fees for small retailers in accordance with the new regulations.
Though a series of talks between the regulator and the credit card industry last year, about 2 million retailers were estimated to have seen their service fees lowered.
The biggest beneficiaries were retailers in the dry cleaning industry, as 1.19 million of the 1.2 million laundry services nationwide were to see a cut in card settlement charges.
More than 98 percent of 64,000 cosmetics stores will see cuts, along with 97.4 percent of 74,000 beauty parlors and 95.2 percent of 120,000 clothing shops, according to the FSS.
Among the beneficiaries are more than 80 percent of 495,000 restaurants and 73.1 percent of 44,000 hospitals.
About a year ago, 1 million retailers nationwide boycotted payment via Shinhan Card and Samsung Card.
Their protest against the major credit card firms was due to the card industry’s lukewarm attitude toward cutting settlement service charges on retailers.
The retailers demanded cutting the service fee rate to 1.5 percent of the payment, from the current level of 2.3 percent charged by Shinhan Card, the nation’s largest issuer.
They also demanded that Samsung Card, the nation’s third-largest credit card issuer, cut settlement service charges on retailers and cease offering exclusive benefits to discount chain Costco Wholesale Korea.
Samsung was the main target of retailers’ protests as it was charging Costco’s Korean unit a service fee of only 0.7 percent, while the rate on most small retailers charged by the issuer hovered above 2 percent in recent years.
Last year, the FSS issued a warning against four firms ― Shinhan, Samsung, Lotte and Hana SK ― for reckless issuance of cards.
“Due to the companies’ negligent screening of consumers’ financial status, they incurred huge bad loans and a growing number of credit delinquents,” said the regulator.
By Kim Yon-se (email@example.com