The Financial Services Commission (FSC) is set to initiate reforms aimed at reducing the payment fee burdens on small business owners. The FSC plans to expand the scope of the disclosure requirements for electronic financial companies’ payment fees by 2028 and improve the multi-tiered payment gateway (PG) structure.
Currently, only 11 companies, with a monthly average transaction size of over 100 billion won for simple payments, are required to disclose their fees. However, from next year, the scope will be expanded to include companies with a combined monthly transaction size of 500 billion won or more for both general and simple payments. This move aims to address the difficulty small business owners face in adequately comparing fees from various electronic financial service providers.
By 2027, this threshold will be lowered to 200 billion won per month, and from 2028, all prepaid and PG companies will gradually be required to disclose their fees. The range of companies required to disclose will start to increase significantly from 2027.
The items that need to be disclosed will also be detailed. Previously, total fees for card and prepaid payment methods were disclosed, making it hard to identify the actual fees received by PG operators. In the future, the fees collected by external parties like card issuers and top-tier PG operators, as well as those directly received by prepaid providers and PG operators, will be separately disclosed. Additionally, the FSC will categorize and disclose fee structures based on business model and ancillary operations to facilitate industry-specific comparisons.
The financial authorities will also enhance the verification of disclosed data. Currently, only the initial disclosure data is verified by accounting firms, but going forward, verification standards will be established, and regular audits will be conducted. The FSC expects that the reforms will enable merchants to transparently compare the fees of various electronic financial companies, thus promoting market competition and leading to more reasonable fees.
The regulation of unreasonable fee burdens arising from the multi-tiered PG structure will also be strengthened. When entering or renewing contracts with lower-tier PG operators, prepaid providers or higher-tier PG operators will be required to assess the financial soundness and risk of illegal activities. Contracts with high-risk lower-tier PG operators will be restricted or extended with limitations.
Merchants’ fee notification obligations will be further specified. Previously, only ‘merchant fees’ were required to be notified, but moving forward, payment fees must be clearly divided and communicated. There will also be an obligation to provide advance notice of any fee changes. An amendment to the Electronic Financial Transactions Act is currently under discussion in the National Assembly, and if passed, it is expected to expedite the process of removing financially unstable PG operators. Meanwhile, the FSC plans to implement ad-hoc disclosures reflecting these reform measures from November.