News Sumitomo Mitsui to cut credit card fees by 30%

[thomas]

I hope that other CC companies will pick up on that trend.

Sumitomo Mitsui Card, a subsidiary of Sumitomo Mitsui Financial Group, will reduce its transaction fees for small and medium-sized businesses by approximately 30% this year. This adjustment will position its rates as among the most competitive in the Japanese market. Starting this month, the company will decrease the fee for smartphone-based credit card transactions to 1.98%, a drop from the existing 2.7%. Later in the year, the same reduced rate will apply to transactions made using Sumitomo Mitsui Card's credit card machines. This across-the-board reduction is a rare strategy for a credit card firm. With this change, Sumitomo Mitsui Card's fees will be significantly lower than the typical industry standard of about 3%, aligning closely with the rates for QR code payments offered by PayPay, a prominent mobile payment service in Japan.

Credit cards still account for over 80% of cashless payments in Japan. But while credit card payments increased 13% in 2023, QR code payments -- like those offered by PayPay -- jumped 38%. Sumitomo Mitsui Card hopes lower fees will attract more small and midsize merchants and help it close the gap in terms of growth. High fees have been a major obstacle to the adoption of cashless payments in Japan, especially among smaller merchants. It is not unusual for smaller businesses in the U.S. and Europe to pay less than 3% in fees. [...] Japan's government has been promoting the use of cashless payments, including by launching a rewards program in 2019. Cashless payments as a share of all payments have since increased 12 points to 39%, though the figure tops 50% in many other leading economies. Lower fees could help lift the figure in Japan.

Paywall alert:

Sumitomo Mitsui credit card unit to cut fees 30% for smaller merchants

Japanese card issuer eyes mounting competition from QR code payments

asia.nikkei.com