Consumers will see enhanced compensation for currency losses incurred when canceling international card transactions. Improvements to the system will allow for automatic compensation for some transactions that previously required consumers to apply for reimbursement due to the card issuer's inability to verify the original transaction.
On September 22, the Financial Supervisory Service (FSS) announced plans to strengthen the automatic compensation system for currency losses and improve consumer guidance in the cancellation process for international card transactions.
Typically, cancellations of international card transactions are processed based on the exchange rate applied at the time of the original payment. Card issuers verify the original transaction using the cancellation slip received from overseas merchants and process the cancellation using the exchange rate that was applied to convert the original transaction into Korean won.
However, issues arise when some cancellation slips lack approval numbers or contain incorrect information. Partial cancellations, where only some items from a single transaction are canceled, can also complicate the verification of the original transaction.
In such cases, if the exchange rate has decreased since the time of the original payment, consumers may receive a lower amount in Korean won upon cancellation, resulting in a currency loss. Previously, consumers had to verify whether a currency loss occurred and separately apply for compensation from the card issuer.
The FSS and the card industry plan to enhance card issuers' systems to connect transactions even if some information on the original and cancellation slips does not match. For cancellation transactions where the original transaction cannot be verified, an additional verification process will be implemented to ensure automatic compensation for currency losses.
Information provided to consumers will also be expanded. Card issuers will notify consumers via text message of the cancellation amount in both foreign currency and Korean won once the cancellation of an international transaction is completed in September. Guidance on the currency loss compensation system and application methods will also be strengthened through card issuer websites and mobile apps.
As the use of international cards increases, the potential for consumer inconvenience due to exchange rate fluctuations is also growing. According to the Bank of Korea, domestic consumers' spending on international cards is projected to rise from $19.22 billion in 2023 to $21.72 billion in 2024 and $22.91 billion in 2025.
The won-dollar exchange rate rose from 1,462.8 won on May 4 to 1,504.3 won on June 1 and 1,554.9 won on July 1, before falling to 1,429.8 won on August 3 and 1,370.4 won on September 1.
The FSS and the card industry plan to complete preparations by the end of this year, following system development and detailed operational planning, and to implement the enhanced system, verification procedures, and guidance for unverified cancellation transactions starting next year.
On September 22, the Financial Supervisory Service (FSS) announced plans to strengthen the automatic compensation system for currency losses and improve consumer guidance in the cancellation process for international card transactions.
Typically, cancellations of international card transactions are processed based on the exchange rate applied at the time of the original payment. Card issuers verify the original transaction using the cancellation slip received from overseas merchants and process the cancellation using the exchange rate that was applied to convert the original transaction into Korean won.
However, issues arise when some cancellation slips lack approval numbers or contain incorrect information. Partial cancellations, where only some items from a single transaction are canceled, can also complicate the verification of the original transaction.
In such cases, if the exchange rate has decreased since the time of the original payment, consumers may receive a lower amount in Korean won upon cancellation, resulting in a currency loss. Previously, consumers had to verify whether a currency loss occurred and separately apply for compensation from the card issuer.
The FSS and the card industry plan to enhance card issuers' systems to connect transactions even if some information on the original and cancellation slips does not match. For cancellation transactions where the original transaction cannot be verified, an additional verification process will be implemented to ensure automatic compensation for currency losses.
Information provided to consumers will also be expanded. Card issuers will notify consumers via text message of the cancellation amount in both foreign currency and Korean won once the cancellation of an international transaction is completed in September. Guidance on the currency loss compensation system and application methods will also be strengthened through card issuer websites and mobile apps.
As the use of international cards increases, the potential for consumer inconvenience due to exchange rate fluctuations is also growing. According to the Bank of Korea, domestic consumers' spending on international cards is projected to rise from $19.22 billion in 2023 to $21.72 billion in 2024 and $22.91 billion in 2025.
The won-dollar exchange rate rose from 1,462.8 won on May 4 to 1,504.3 won on June 1 and 1,554.9 won on July 1, before falling to 1,429.8 won on August 3 and 1,370.4 won on September 1.
The FSS and the card industry plan to complete preparations by the end of this year, following system development and detailed operational planning, and to implement the enhanced system, verification procedures, and guidance for unverified cancellation transactions starting next year.
* This article has been translated by AI.
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