Controversies are rising as Hyundai Card decided not to pay authentication fee (cost to collect chits) for Samsung Pay payment to VAN businesses.

It seems that ‘2nd Hyundai Card Crisis’ will take place as Korea Credit CAT Association and all of authorized VAN stores that handle Samsung Pay Korea Credit CAT Association announced that they will take collective action such as rejecting payments from Hyundai Cards if Hyundai Card decides not to withdraw from its plan. It also seems that this will have a negative impact on Samsung Pay’s strategy to expand its business.

According to industry, Hyundai Card recently informed VAN businesses not to claim commissions on costs to collect Samsung Pay’s chits.

According to Hyundai Card’s official document that Etnews was able to exclusively obtain, Hyundai Card set up guidelines to tell VAN businesses not to claim any commission off of electronic signature capture collecting task (collecting electronic signature) related to Samsung Pay payment that started from the 1st of October. According to its guidelines, it informed VAN businesses that it will not give any commissions on collecting chits from Samsung Pay and App Card 381 transaction that occur while using offline mobile transactions.

Chit collecting task is one of major businesses that authorized VAN stores have been doing for many years instead of card businesses. Their main jobs are to collect chits to differentiate if cards were used illegally and saving them. As it recently was changed to electronic signature, authorized VAN stores have been managing electronic signature chits and others besides paper chits. These tasks take up 40% of authorized VAN stores’ profits.

Hyundai Card made it known that there is no reason to collect chits since personal authentication such as fingerprint authentication takes place before Samsung Pay payments and that it is not justified to pay commission.

“Because personal authentication takes place in prior for simple payments, Samsung Pay does not need separate work to collect chits. Hyundai Card is currently examining a way to completely eradicate Samsung Pay electronic signature task.” said a person that is affiliated with Hyundai Card.

Korea Credit CAT Association is planning to request Hyundai Card to withdraw from its plan regarding this. All of authorized VAN stores made it known that they will take strong collective action such as rejecting payments from Hyundai Cards and others.

“Authorized VAN stores are in charge of management and installing terminals so that they can receive costs of acting as proxies in purchase, balance, and collection of chits related to Samsung Pay. Hyundai Card telling us not to claim commission off of collecting chits means that it wants to close all of small authorized VAN stores.” criticized Secretary-General Cho Young Seok of Korea Credit CAT Association. “Although there is an alternative plans such as changing how VAN businesses collect collection fees, it is absurd that it does not want to pay us for acting as proxies that have been our jobs for many years. Vicious cycles of authorized VAN stores receiving commissions that they cannot receive through maintenance cost of affiliated stores or increasing commission of other proxy businesses will continue.”

He also added that they will take strong collective actions such as rejecting Hyundai Cards as this is directly connected to industries’ businesses.

Samsung Electronics is also perplexed about why Hyundai Card is taking such stance because there is a possibility that an unprecedented situation can take place such as not being to use Samsung Pay at affiliated stores due to conflicts between Hyundai Card and VAN businesses when it is important to make it more versatile and increase uses of Samsung Pay payments.

A person that is affiliated with Samsung Electronics said that although it feels puzzled as this kind of incident took place at an important time, it will try to solve the problem as soon as possible.

Staff Reporter Gil, Jaeshik | osolgil@etnews.com& Staff Reporter Seo, Hyeongseok | hsseo@etnews.com