Korea is a country that has recently launched a new policy designed to facilitate the use of cash at outlets run by small business entities. As we know, in the past, many merchants faced the reality of paying per-transaction fees to banks or payment service providers every time they received cash from customers. Such costs sometimes accumulate, especially for small businesses.
Taking into consideration small businesses, the Korean government has come up with a policy known as the Small payment cash information usage fee. Under the new rule, firms that qualify for the exemption will not pay fees for accepting cash under the specified limit. This will shunt down the costs for small merchants and help them keep on receiving money from customers.
The Small Payment Cash Information Usage Fee Exemption Work
The Small Payment Cash Information Usage Fee is the additional cost that business entities incur when they adopt those banks or payment service providers when they are undertaking fees and accepting cash payments from their customers. This fee may be insignificant for small businesses that receive numerous small amounts of cash payments.
In order to support and revive these small businesses, the South Korean government has come up with an exemption to the Small Payment Cash Information Usage Fee. Small businesses will also be relieved from the implications of this policy insofar as they conform to some criteria whereby they are not required to pay this fee when they accept small cash payments of up to the specified amount.
Qualifying Criteria for Small Businesses in Korea
Small Payment Cash Information Usage Fee implies that any enterprise that is categorized as a small business does not need to pay some fees set by the South Korean government; however, it has to conform to specific requirements. These criteria help eliminate instances whereby an excess fee is waived and passed on to the wrong parties other than the needy and smaller merchants.
An important criterion that needs to be taken into account is the business type, the revenue of which should be at most $ 1 million a year on average. They target sales, meaning that there is actually a limit to how much money a business can make in a year to qualify for this exemption and be deemed a small business. For instance, the criteria might decree that the application must come from a company that earns up to $500,000 per year.
Impact on Digital Payment Adoption
The policy proposed by the Ministry of Health & Welfare exempting small businesses from small payment cash information usage fees may change the rate of adoption of digital payments in South Korea. There are a few potential impacts:
- On the one hand, one of the measures is making it less costly for small merchants to retain cash payments rather than associated with digital or mobile solutions.
- If businesses are able to receive cash without acquiring additional charges, they may not be interested in other digital payment systems, thus causing harm to financial development.
- Customers who accept cash and avoid other forms of payment will also find little reason to slide a card or launch an app.
Cash Handling Costs for Merchants
Cash as a medium of payment has its advantages and disadvantages; taking payments in cash poses some risks and issues that affect business entities, as well as tiny traders. These are popularly referred to as cash handling costs. This is because the new exemption policy has been devised to decrease some of these costs.
Another probable cash handling cost is the possible charges that banks or payment providers charge to merchants each time they place or transact cash. This involves charging a fixed amount based on the number of cash deposits made or based on a ratio of the total value of money deposited.
Final Thoughts
South Korea’s new 소액결제 현금화 정보이용료 exemption policy aims to support small businesses and ensure cash remains a viable payment option, especially for lower-value transactions, by waiving the typical per-transaction fees for small cash payments under a specific limit.
The policy reduces a significant cost burden for qualified small merchants. While promoting digital payments remains a priority, this exemption acknowledges the importance of cash accessibility and affordability for both businesses and consumers. The Small Payment, Cash Information Usage Fee exemption represents a practical step towards achieving that balance while providing tangible relief to the nation’s smallest entrepreneurial enterprises.
