Seoul scraps card transaction fees for small shops with new payment system
- 5 years ago
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Small shops and franchise stores spend a sizeable amount of their earnings on card processing fees.
To help them out, the Seoul City Government launched a new mobile payment platform that will waive transaction fees for such businesses.
Oh Soo-young introduces to us the Zero Pay system.
Seoul Metropolitan Government has launched a trial run of its Zero Pay mobile platform across hundreds of local shops and public facilities on Thursday.
The mobile payment system aims to cut transaction fees for small business owners while providing shoppers with tax incentives.
Shoppers can now scan the Zero Pay QR code at a store,... and enter the amount they have to pay,... which will go straight out of their bank accounts.
A total of 24 mainstream banks and payment networks have joined the venture, adding the Zero Pay feature to their respective smartphone payment apps.
The platform charges little to no transaction fees -- depending on the store's annual sales revenue.
Businesses making less than 710-thousand U.S. dollars of sales revenue a year are exempt from transaction fees,... while those with sales revenue above that pay between 0.3 and 0.5 percent.
No transfer fees will be given to the banks.
These conditions are expected to help some 660-thousand small business owners in Seoul, who spend between thirty to fifty percent of their profit on card transaction fees.
"Nearly 99 percent of our customers pay with card and the transaction fees take a huge toll on our income -- it's about 1.4 percent for credit cards right now. We expect the Zero Pay system will help us reduce costs substantially."
To encourage locals to use the system,... the city will allow tax deductions of 40 percent on Zero Pay purchases when customers file their annual income tax returns. This compares to the 15 percent rate for credit cards.
However, there are some concerns over whether the system will prove effective.
"It's unclear whether consumers will choose to use Zero Pay. For instance, similar fintech like Samsung Pay and Kakao Pay haven't been used as much as expected. Most consumers still prefer to pay with credit card even though debit cards offer a higher 30 percent tax deduction. Also, Zero Pay lacks the benefits or installment features that credit cards have, meaning spending could be limited."
Seoul plans to continue expanding the number of affiliated merchants as well as introduce contactless payment next year.
Other parts of the country will also begin adopting the system.
"Whether Zeropay will take off remains to be seen. But its definitely something to keep an eye on as it takes us further beyond the boundaries of traditional network payment systems.
Oh Soo-young, Arirang News."
Small shops and franchise stores spend a sizeable amount of their earnings on card processing fees.
To help them out, the Seoul City Government launched a new mobile payment platform that will waive transaction fees for such businesses.
Oh Soo-young introduces to us the Zero Pay system.
Seoul Metropolitan Government has launched a trial run of its Zero Pay mobile platform across hundreds of local shops and public facilities on Thursday.
The mobile payment system aims to cut transaction fees for small business owners while providing shoppers with tax incentives.
Shoppers can now scan the Zero Pay QR code at a store,... and enter the amount they have to pay,... which will go straight out of their bank accounts.
A total of 24 mainstream banks and payment networks have joined the venture, adding the Zero Pay feature to their respective smartphone payment apps.
The platform charges little to no transaction fees -- depending on the store's annual sales revenue.
Businesses making less than 710-thousand U.S. dollars of sales revenue a year are exempt from transaction fees,... while those with sales revenue above that pay between 0.3 and 0.5 percent.
No transfer fees will be given to the banks.
These conditions are expected to help some 660-thousand small business owners in Seoul, who spend between thirty to fifty percent of their profit on card transaction fees.
"Nearly 99 percent of our customers pay with card and the transaction fees take a huge toll on our income -- it's about 1.4 percent for credit cards right now. We expect the Zero Pay system will help us reduce costs substantially."
To encourage locals to use the system,... the city will allow tax deductions of 40 percent on Zero Pay purchases when customers file their annual income tax returns. This compares to the 15 percent rate for credit cards.
However, there are some concerns over whether the system will prove effective.
"It's unclear whether consumers will choose to use Zero Pay. For instance, similar fintech like Samsung Pay and Kakao Pay haven't been used as much as expected. Most consumers still prefer to pay with credit card even though debit cards offer a higher 30 percent tax deduction. Also, Zero Pay lacks the benefits or installment features that credit cards have, meaning spending could be limited."
Seoul plans to continue expanding the number of affiliated merchants as well as introduce contactless payment next year.
Other parts of the country will also begin adopting the system.
"Whether Zeropay will take off remains to be seen. But its definitely something to keep an eye on as it takes us further beyond the boundaries of traditional network payment systems.
Oh Soo-young, Arirang News."