South Korean Drugstores Demand Lower Interchange Fees from Credit Card Companies

Strategic Insights -

South Korea's national association of drugstores, the Korean Pharmaceutical Association, is calling on credit card companies to reduce their interchange fees, which they claim are "unduly high." This demand follows similar requests from gas stations, restaurants, and other merchants, who argue that the excessive fees are hindering their businesses. The association has met with officials from the National Tax Service and South Korean card companies to negotiate a reduction in the fees, which currently range from 2.4% to 2.7% for drugstores. In contrast, general hospitals are charged a lower rate of 1.5%.

Key Takeaways:

  • The Korean Pharmaceutical Association is demanding a reduction in interchange fees from credit card companies, citing that the current rates of 2.4-2.7% are "unduly high."
  • The association has met with officials from the National Tax Service and South Korean card companies to negotiate a reduction in the fees.
  • The Korea Oil Station Association has already proposed a reduction in interchange fees to 1% from the current 1.5%.
  • The demands come six months after a similar row between credit card firms and discount outlets such as Shinsegae and E-Mart.
  • Similar requests to reduce interchange fees have been made by the Korea Restaurant Association, private institutes, and insurers.

Statistics:

  • Interchange fees for drugstores: 2.4-2.7%
  • Interchange fees for general hospitals: 1.5%
  • Proposed reduction in interchange fees: 1% (Korea Oil Station Association)
  • Duration of interchange fee row between BC Card Co. and Shinsegae and E-Mart: six months (ended in late April)

Sources:

  • Yonhap
  • Asia Pulse