Today, most people carry at least one card in their wallet, be it a credit or a check card. It has permeated public transportation, and is accepted even in taxis. Thus, card usage seems to have become a way of life. It is not uncommon to see people hold out their cards just to buy gum or candy at convenience stores. Direct payment through smartphone apps has become common, and it makes paying caterer’s bills convenient because delivery men link their smartphones with card-payment terminals. However, customers feel inconvenienced when they have to pay small sums with their cards, and some enterprises discriminate between those customers who pay by cash and those who pay by card. Even now, there are some enterprises who accept only cash. Why do they still say “We do not accept cards”?
Apps with menus to select category and make an immediate payment are becoming popular. Advertisements for such apps appear frequently on TV and movie screens. However, reviews of such apps include negative reviews by customers who are dissatisfied about discrimination when it comes to card payment. The main complaint is that the weight and amount of food delivered is dependent on the payment mode. There are reviews which say that when payment is made by card, the quantity of sauces are considerably less, or the amount of lean meat is diminished and bones increased when meat products are ordered. Another complaint was related to coupons not being provided with ordered food paid for by card and subtlely insisting that customers pay with cash. One customer stuck it to a chicken restaurant franchise once when he made an unwonted payment with a credit card, and the coupon that should have been attached to the box of chicken was gone. “Not providing coupons when payment is made by card is forcing customers to use cash and not credit card,” he said. Some food delivery outlets demand cash payment from customers upon delivery, not even asking them about their preferred payment in advance. Mr. Lim (false name) still remembers a raw deal he once received. “The delivery man said that payment by card under 10,000 won was not allowed; he did not even ask me about the mode of payment. He took it for granted that payment under 10,000 won was a small payment. The bill for the food delivered was 7,000 won. I was very angry and told him I could sue him for rejection of card payment. As a result, I could make the payment by credit card.”
What about other enterprises who deal offline with their customers? Even now, it is not easy for customers to use cards in small clothes shops and other retail outlets. They induce customers to pay in cash, offering cash discounts, and impose an additional tax for card payments. They charge an additional 10 percent on the printed price for card payments; they also do similar practices offering discounts for cash payments under the name of cash-discount. This practice is prevalent not only in retail outlets but also in other places that offer services such as car tuning, and even plastic surgery. In the case of plastic surgery, the additional cosmetic surgery tax that took effect in February 2014 is included in the base price for purposes of calculating the additional 10 percent tax. However, since some hospitals do not levy additional tax when customers pay in cash, it means that the hospitals are not going to declare the amount, collected ostensibly as “tax,” to the government, which is certainly illegal. To customers, the practice acts like discounts.
Is it a fair relationship between the three?
The above is a description of illegal treatment meted out to customers who pay by card. This discriminatory treatment of customers based on their mode of payment, including the act of inducing them to pay cash by using the 10 percent additional tax ploy, is unfair. Customers point out that card member store owners try to evade tax by making customers pay cash. Meanwhile, store owners say they induce customers to pay cash, as otherwise they have to pay commission fee to the card corporations for card payments. For them, it is a matter related to earning a living. The relationship between card corporations, member stores, and customers allows customers the convenience of using cards instead of cash, provides card corporations with a customer base and makes it mandatory for card member stores to pay a commission fee to card corporations. In this type of relationship, what kind of benefits do the card member stores get? To represent the situation card member stores face, The Ajou Globe interviewed eight retails and two convenience stores.
Lament of member stores
Based on the above relationship, card corporations ought to provide reasonable benefits to card member stores. In a nutshell, benefits offered to card member stores by card corporations seem inadequate. Benefits of becoming members of card corporations differ between one corporation and another, but most accumulate payment linked points. However, accumulating points is effective only if all customers make payments using cards issued by the same card corporation. Advertisements in mobile phones are one more benefit card member stores derive. With an increase in the number of smartphone users, in-app advertisements have also increased. Some card corporations promise member stores popup advertisements within apps. However, they rarely set up the advertisements, and on occasion when they do, it becomes an inconvenience that arouses the antipathy of the app users. Advertisements in customers’ card usage statements are yet another benefit. Card corporations put store owners at ease by promising them a brochure containing customers’ card usage statements. Although one store owner said that advertisements in customers’ card usage statements would have a good effect, he was not enthusiastic about the brochure since he felt card corporations were not interested in including advertisements of small private stores in the card usage statements. Actually, envelopes of card usage statements carry a few advertisements of card member stores, but these are usually for major companies or franchises. (Refer picture).
Why do stores then become members of card corporations even though the benefits are few? The major reason is increased usage of cards. According to the Credit Finance Association, use of credit cards and check cards across the country is increasing constantly. Given the increased number of card users, losing customers seems to be the natural fallout if the card payment system is not in place. Mr. Kim (false name) who runs a restaurant says having a card payment system is not an option, but is essential. “Even elementary school students carry their own check cards and parents deposit their pocket money into the card accounts. In this scenario, absence of a card payment system amounts to losing customers.” Mr. Kim adds, “Stores naturally set up the system as the real danger is not paying the commission fee, but losing customers.”
How heavy do store owners find the commission fee? Depending on the card corporation, the minimum commission fee is one to two percent, and the maximum is two to four percent. Although the numerical value of the percentage is not very high, store owners say it is a considerably heavy burden. A restaurant owner says that he pays up to 500,000 won per month, which leads to an annual loss of about 6,000,000 won.
What made them say “We do not accept cards”?
Customers use cards for the convenience of being able to pay anywhere. Card corporations get their commission fee from member stores. However, most card member stores who offer the convenient payment system have no guaranteed benefits. Given the state of the economy, the cost should be borne by the beneficiary, not the benefit provider. Needless to say, the act of discrimination toward card users by card member stores is illegal and should be dealt with accordingly. However, the background to this act of discrimination is a systemic problem. To resolve the irony that card corporations maintain and expand their customer base by virtue of card member stores with little or no benefit to the member stores, it would require institutional intervention with respect to the commission fee, or the benefits to member stores should be enhanced.
Lee Dong-yoon firstname.lastname@example.org
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