Consumer Groups Push Back Against Delivery App Fee Regulation: "Cost Burden Could Increase"

[Financial News] Amid ongoing legislative discussions in the National Assembly of the Republic of Korea over delivery app fee structures, consumer groups have called for the effects of regulatory policies to be assessed not simply by whether fees are reduced, but by how the burden on consumers changes. They warned that efforts to ease the burden on small businesses could produce unintended side effects, such as higher food prices or delivery fees.
According to industry sources on the 18th, the Consumers Union of Korea said in a statement that it supports the intent of legislation concerning delivery platforms currently under discussion in the National Assembly of the Republic of Korea. However, it added, "What the government should establish is not delivery fee prices, but fair principles." Since platforms, merchants, riders and consumers are interconnected within a single cost structure, artificially reducing the burden on one party could ultimately shift costs to another, the group noted.
The National Assembly of the Republic of Korea is currently considering measures to cap total fees, including brokerage fees, payment processing fees and delivery fees, as well as preferential fee rates for small and micro-sized merchants on the platforms. The measures are intended to reduce the overall costs imposed by delivery apps, but concerns have also been raised that changes in the cost-sharing structure could lead to unexpected market distortions.
The Consumers Union of Korea said it supports the policy direction of strengthening small businesses' bargaining power and improving the platform-centered transaction structure. However, it pointed out that lowering individual items such as commissions or delivery fees does not necessarily reduce total costs, and that the burden felt by consumers may also change.
The union particularly emphasized, "Even if fees are lowered, the total cost does not disappear." It explained that savings resulting from lower costs for merchants could be passed on through higher food prices or increased delivery fees for consumers. They could also appear in the form of reduced discounts, coupons or membership benefits. Accordingly, the union argued that the effects of fee regulation should be assessed by examining whether the total amount consumers actually pay has decreased, rather than focusing solely on changes in commission rates.
The union also warned that the costs incurred when using delivery apps consist of multiple elements, including brokerage fees, payment processing fees, advertising costs and delivery fees. Regulating only one type of cost could therefore shift the burden by causing other cost items to increase. In the end, a policy that reduces the burden on one side could lead to higher costs for another.
The union also urged caution over having the government directly set minimum and maximum delivery fees. Since delivery fees vary according to a range of conditions, including distance, time of day, region, weather and order volume, it recommended that the government focus its policy capabilities on improving the transparency and fairness of the cost structure rather than setting uniform prices.
Instead, it emphasized the need to expand information disclosure so consumers can check how delivery fees are calculated and how costs are shared. Consumers must be able to see how the money they pay is distributed among platforms, merchants and riders to make informed choices, the union explained. This would also make it easier to determine whether costs had been shifted to consumers.
The union said that policy effectiveness should not be judged solely by whether fees have been reduced. It added that policymakers should also examine whether costs are being shifted to other parties and whether consumers' actual financial burden is decreasing.
[email protected] Jang Min-kwon Reporter