Korean delivery platforms, merchants reach consensus on tiered fees

Lee Jung-hee, head of the government consultative body overseeing discussions on delivery platform commissions, briefs the press to announce the results of the 12th meeting at the Government Complex Seoul on the 14. (Yonhap)

Korean delivery platforms and merchants reached an agreement on Thursday to adopt a tiered fee structure for delivery app services, ending a four-month standoff.

A committee of delivery platforms and merchant groups finalized the new fee system during the 12th meeting held at the Seoul Government Complex. Under the plan, the top 35 percent of partner stores by sales will pay a fee rate of 7.8 percent, with delivery charges set between 2,400 won ($1.70) and 3,400 won. Stores in the 35 to 50 percent range will be charged 6.8 percent in fees, with delivery costs in the 2,100 to 3,100 won range. The 50 to 80 percent bracket will also pay a 6.8 percent fee, with delivery fees ranging from 1,900 to 2,900 won. Stores in the bottom 20 percent will face a reduced 2 percent fee, with delivery fees set at 1,900-2,900 won. This system is expected to cut fees by 2.3 to 7.8 percentage points for stores outside the top 35 percent tier. The new fees will vary by region and be effective for three years.

However, the consensus was partial, with two merchant associations - the Korea Foodservice Industry Association and the National Franchise Owner Association - walking out.

“Although it is not a perfect solution, we agreed to move forward as a starting point, given the difficulties,” Lee Jung-hee, the committee’s mediation chairperson, said.

The committee‘s mediators also suggested establishing a permanent body to continue addressing unresolved concerns. Although not legally binding, the agreement includes provisions for corrective measures if commitments are not met.

Baemin, a leading delivery app operated by Woowa Brothers Corp., pledged to follow the agreement. “We will finalize the detailed policies and implement the plan once system development is complete,” the company said. Coupang Eats, operated by Coupang Inc., also confirmed it would adopt a similar approach to ensure all business owners benefit from the new fee structure.

The Korea Federation of Micro Enterprise (KFME) and the Korea Merchant Association, which supported the agreement, expressed hope for its swift implementation. “Although the plan is not fully satisfactory, we support it given the urgent need to reduce the burden on struggling small businesses,” a KFME representative said.

In contrast, the Korea Foodservice Industry Association and the National Franchise Owner Association argued the measures fall short of effectively easing costs for small businesses.

During an earlier meeting, delivery platforms proposed a tiered fee structure for the first time, but prior attempts to present a cooperative plan that aligned with the committee’s mediation principles were unsuccessful.