Starting from the 21st, the government will distribute up to 450,000 won worth of "living recovery consumption coupons" to the entire nation. This is a measure to recover the livelihood economy by promoting consumption and increasing sales for small merchants and self-employed individuals. The consumption coupons, amounting to a scale of 12 trillion won, can only be used at business sites with annual sales below 3 billion won.
However, credit card companies are not entirely pleased with the consumption coupons. They have already begun expanding their servers and classifying business sites in conjunction with the coupon plan. In 2020, about 70% of the emergency disaster relief funds were distributed via credit or debit cards, so it is expected that card usage will dominate the coupons this time as well. Some card companies even worked through the weekend to meet the government's deadline.
Recently, the Ministry of the Interior and Safety requested credit card companies to consider reducing the merchant fee rates for transactions made with the consumption coupons. The intention is to alleviate the burden of fees on small merchants as a form of social return. Small merchants in sectors eligible for the consumption coupons, with annual sales below 3 billion won, are already receiving preferential fee rates (0.40-1.45%), and the government is asking for these rates to be adjusted to even lower levels (0.15-1.15%).
Credit card companies express concern over the government's request. Continuous fee reductions have already led to deficits in their core credit sales sector, and for small business establishments, the fee rates are nearly at cost. They argue that the notion of utilizing the consumption coupon initiative to attract new customers or reactivating dormant customers is an illusion. Even if card companies market their products, most customers only use the cards they typically use. Additionally, all expenses related to building the coupon system and relevant marketing are borne by the card companies.
During the distribution of the emergency disaster relief funds, seven major credit card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana Card) reportedly incurred a loss of about 8 billion won, excluding infrastructure building costs, sales, and management expenses. If government-funded programs are utilized as marketing tools to acquire customers, they would also have to be mindful of the government and financial authority's scrutiny. In fact, major credit card companies stated they currently have no specific marketing plans, and even if they proceed, it would likely be on a very small scale.
Furthermore, the emergence of additional fee rate reductions raises concerns about incurring 'reverse margins' due to increased expenses. The fee rates for small and medium-sized establishments eligible for consumption coupons are decreasing annually. In February, the merchant fee rates were reduced, with credit card fees for small and medium-sized establishments dropping by 0.05-0.1 percentage points and debit cards by 0.1 percentage points.
The Korea Institute of Finance has reportedly requested a meeting with the Vice Minister of the Ministry of the Interior and Safety to convey the opinions of the credit card industry. They aim to communicate that, looking at the case of disaster relief funds, there was no revenue for the card industry and that the system needs to be quickly established to adjust the fee rates with only 10 days until the coupon's launch. However, the credit card industry is expected to discuss ways to participate in alleviating the burden on small merchants, such as through methods other than reducing fees, like fund creation.