“Lower the fees” vs. “Income takes a hit” ... Conflict over delivery-app regulation intensifies

[Financial News] Tensions are escalating between self-employed business owners and delivery riders over legislation to cap total costs, including delivery-app commissions and delivery fees, at 15% of the order amount. Business owners are calling for legislation to reduce the costs of using platforms, while riders are protesting that a blanket cap that includes delivery fees could lead to lower incomes. As concerns grow that regulations intended to protect small businesses could threaten delivery workers’ livelihoods, debate over the legislation’s effectiveness is intensifying.
According to industry sources on the 5th, about 400 riders from Seoul, Incheon and Gyeonggi Province held a rally in front of the fountain plaza at Cheong Wa Dae in Jongno-gu, Seoul, at 10 a.m. that day, calling for the complete withdrawal of a bill related to a delivery-app fee cap.
That same day, small-business and civil society groups, including the National Franchisee Association and the Korea Federation of Micro Merchants and Self-Employed Workers, held a “Rally Calling for Platform Legislation for People’s Livelihoods” on the steps of the National Assembly’s main building. They called for the swift passage of the so-called “three major bills”: the Online Platform Act, the Food Delivery Platform Act and the Mutual Cooperation Act.
Both sides are invoking their right to make a living, but their proposed solutions are diametrically opposed. Business owners say the costs of using platforms—including commissions, delivery fees and advertising costs—are excessive. They argue that actual profits fall sharply when advertising and discount coupon costs are added to a 7.8% commission, a 3% payment processing fee and a delivery fee of 3,400 won paid by the business owner.
Business owner groups are calling for a cap to ensure that total payments to platforms do not exceed 15% of the order amount. They have also put forward mandatory provision of contracts, establishing standards for delivery fees and guaranteeing small-business groups the right to negotiate as key legislative priorities.
Riders, meanwhile, oppose treating delivery fees as subject to the same regulations as commissions. They argue that a blanket cap should not apply because commissions taken by platforms and delivery fees paid as compensation for the actual labor of making deliveries are different in nature.
For an order amount of 20,000 won, applying a 15% cap on total costs would limit platform-related expenses to a maximum of 3,000 won. But if the delivery fee paid by the business owner is 3,400 won, the delivery fee alone amounts to 17% of the order amount. That would exceed the cap even before commissions, payment processing fees and advertising costs are included.
The average order amount cited in the delivery-app industry is around 20,000 to 25,000 won. The lower the order amount, the larger the share taken up by delivery fees, which tend to be fixed costs. Riders are concerned that if a cap on total fees is imposed without accounting for this cost structure, platforms are likely to lower delivery fees.
In particular, delivery fees are determined by factors such as delivery distance, time required, weather conditions and the availability of riders in each area, rather than by food prices. For deliveries over the same distance, rider compensation generally does not vary much whether the order is for 10,000 won or 30,000 won. Critics say, however, that limiting total costs in proportion to the order amount could make it harder to secure delivery fees for smaller orders.
There are also concerns that the costs resulting from regulation could be passed on to consumers. Professor Lee Yu-seok of Dongguk University’s Department of Business Administration said, “Delivery apps cannot absorb these losses indefinitely, so they could respond by increasing the order amount, adding to consumer costs or reducing rider compensation,” and pointed out, “Regulation intended to lower fees could lead to higher costs for consumers, lower rider incomes and a decline in the quality of delivery services.”
The key issue, then, is who will bear the costs incurred in efforts to reduce the burden of platform fees. Since commissions, payment processing fees, advertising costs and delivery fees each have different cost structures, debate over whether it is appropriate to combine them all and impose the same percentage cap is expected to be unavoidable.
[email protected] Jang Min-kwon Reporter