Endless Conflict over Payment Networks between Visa and BC Card

According to credit card industry sources on Feb. 26, Visa and Korea-based BC Card and has had a conflict over a commission charge for the usage of overseas payment networks for seven years now but the strife between the two companies is expected to continue longer due to a clear difference between their opinions.
 
BC Card is supposed to use Visa’s payment networks for international transactions but it has used China’s UnionPay network or U.S.’ Star network for some overseas transactions, instead of Visa network, to lower a commission. In this regard, Visa has imposed a penalty fee of US$50,000 (53.65 million won) a month for breach of contract from June 2011 to date and BC Card paid more than US$4 million (4.29 billion won) of penalty fees to Visa.

The problem is that the two companies are still too much apart to end seven years of the conflict over the commission. 

BC Card says there is nothing wrong with lowering card users’ commissions by using the Union Pay and Star networks, instead of the Visa network. On the other hand, Visa says it has no choice but to keep imposing a penalty fee for breach of contract unless BC Card changes its payment networks to Visa.

An official from BC Card said, “The payment network issue is related to a contract with Visa. So, the company is continuously imposed a penalty fine and is trying to reach an agreement with Visa to address the issue. However, it doesn’t seem to be easy. Since our customers receive more benefits from lower commissions than penalty fines that are paid to Visa every month, we will not change our payment networks to Visa.”

In this regard, Visa Card also insists that BC Card must abide by the contract first. An official from Visa Korea said, “There is no question about cards issued through the partnership with Visa making payments through the Visa network. BC Card will not have to pay the penalty fee when they use the Visa network as contracted.”