South Korea's financial regulator said Wednesday it will move to reduce commission rates credit card firms charge merchants in an effort to help ease smaller stores' financial burdens.
The average commission rate will be lowered to 1.9 percent from the current 2.1 percent within this year, benefiting 2.14 million merchants, or 96 percent of the 2.24 million card-accepting stores, according to the Financial Supervisory Service (FSS).
The watchdog said the measure will likely enable merchants to save 900 billion won (US$792 million) annually in commissions paid to credit card companies.
Credit card firms will also be banned from offering lower commission rates for large merchants. Violators could face a three-month business suspension or a fine of 50 million won.
"We hope that the measure will be able to make the card fee system fairer and more transparent, helping eliminate social conflict and complaints," FSS vice chief Choo Kyung-ho said at a press briefing.
The move comes as credit card firms have been under sharp criticism for charging far higher fees to smaller merchants in comparison to large retailers, thus pocketing excessive income.
In late February, the National Assembly passed a revision of a law governing credit card commissions, which orders the local financial watchdog to fix a commission rate and bans card firms from charging varying rates for merchants of different industries and sizes.