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Roh Seeks Political Solution to High Credit Card Commissions

Roh Seeks Political Solution to High Credit Card Commissions

Posted June. 29, 2007 03:53,   


President Roh Moo-hyun’s remarks on reducing credit card commissions have triggered controversy. He said, “The issue cannot be dealt with using financial logic; it should be solved using a politician’s logic.”

The president ordered a number of ministries to actively review plans to reduce the commissions following a suggestion by Song Haeng-seon, the president of the Korea Merchant Association, on June 27 in the ‘Conventional Market Policy Performance Briefing’ in the provincial office of North Chungcheong Province.

President Roh proposed a special law that would allow telecommunication operators to provide credit card payment services exclusively to the conventional market. Then, merchants’ commissions would be included into their telecommunication fees.

He also asserted that the credit card commission problem cannot be addressed using financial expert thinking, and that it must be solved by political means.

He also said, “When debating with experts, they will always win because they have their principles of managing a business to guide them, and we cannot argue against that. However, if our plan does not degrade the fair and free competition of our society, and it does not make businesses go bankrupt, we should implement the idea.”

When Deputy Finance Minister Kim Seok-dong responded that conferences on the issue are being held and cases of other countries are being reviewed, the president said, “No need. Forget about other countries; let us do it the Korean way.”

“The single-term system for the presidency also only exists in Korea. The president’s duty to maintain a neutral stance during elections also exists only in Korea, not in any other advanced countries. Therefore, why is it that a system to protect the weak can’t exist only in Korea?” he said.

Cheong Wa Dae spokesman Cheon Ho-seon said on June 28 that although credit companies will ultimately make the final decision on a commission plan, it is possible for the government to direct them toward a certain direction.

Credit cards companies say that the president has gone too far with his ideas, however.

An official in the credit card industry said, “The government is addressing the issue not with market principles, but with political logic. Although the demands of our society cannot be completely ignored, it is hard to agree to an idea that controls prices.”

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