The financial regulator and the ruling party agreed Monday to lower credit card fees for small businesses from early next year to lighten their financial burden.

Financial Service Commission officials who attended a meeting to discuss the issue said the government decided to cut credit card commission rates from 1.5 percent to 0.8 percent.

The beneficiaries include family-owned or self-employed small enterprises with a maximum annual revenue of 200 million won ($175,000), according to the FSC.

For medium-sized enterprises with 2 billion won to 3 billion won in sales, the rates will be lowered from 2 percent to 1.3 percent.

“The card issuers will still find the commission rate cut tolerable, since the recent financial policy reforms have lowered their financing costs,” said an official at the FSC’s microeconomy unit.

The rate-cut decision came amid a lackluster domestic economy, led by low consumer demand and sagging exports.

The authorities expect the rate cut to benefit 2.39 million retail businesses, saving a combined 670 billion won annually.

FSC officials said they hope that the rate cut will encourage more and more small and medium-sized companies to accept card payment, a move to reduce the size of the shadow economy and secure larger tax revenues.

Those with annual revenue of between 300 million won and 1 billion won will enjoy a 0.3 percent rate cut, from the current 2.2 percent to 1.9 percent.

“Large retailers” with annual revenue exceeding 1 billion won will be excluded, as they have taken advantage of favorable commission rates and marketing benefits offered by the card issuers. The average commission rate for these firms stands at 1.96 percent.

In addition to credit cards, commission rates for SMEs on check cards will also be cut by 0.5 percent from 1 percent starting January.

By Chung Joo-won (joowonc@heraldcorp.com)