Legislation to Cap Delivery App Fees Gains Momentum
Legal Standards May Soon Apply to Delivery App Fees
Legislation to place a cap on the commissions delivery apps charge their listed restaurants has begun moving in earnest following a parliamentary audit. According to Yonhap News, in the wake of the audit, both ruling and opposition lawmakers are reviewing bills that would cap delivery platform fees or reduce the burden on merchants, accelerating the related discussions. The fee settlement structure, long left to the market, is now set to be reexamined on the stage of the National Assembly.
Behind this legislative push lies years of accumulated grievances from small business owners. The domestic delivery app market is effectively dominated by a handful of platforms, and critics have consistently pointed out that small and mid-sized restaurants have no choice but to accept fee rates unilaterally imposed on them. Fees are typically charged as a percentage of the order amount, and when payment processing fees and delivery charge structures are added on top, merchants say their share of actual revenue shrinks considerably—a common complaint across the industry. With no viable alternative trading partners, the situation has been described as fees with "nowhere else to go."
Key Issues: Cap Levels and Cost Shifting
The backbone of the bills under discussion is to set a legal cap on commission rates platforms charge listed merchants, or to reduce the overall burden including ancillary costs such as advertising fees. The measures would apply to online platform operators above a certain size, and the scope of discussion could extend beyond delivery apps to other platforms with similar fee structures. However, the ruling and opposition parties remain deeply divided over what percentage to set the cap at and which fee items to restrict.
The issues boil down to two main points. The first is the level of the cap. If set too low, some warn, platforms will have fewer resources to operate delivery workforces and invest in technology, potentially degrading service quality. If set too loosely, the measure will be hard to defend against criticism that it is ineffective. The other is cost shifting. When fee revenue declines, platforms may pass the loss on to consumers through higher delivery charges or expand fees charged to delivery riders. This could undermine the intent of the bill, leaving it a technical challenge to design anti-shift mechanisms alongside the cap.
Small Businesses Welcome, Platform Industry Objects
The divide between supporters and opponents is stark. Small business groups and advocates for micro-merchants view the cap as a minimal remedy for the ills of market monopoly and oligopoly. Their position is that regulation is necessary to protect small merchants who lack bargaining power. The platform industry, by contrast, argues that its commission rates are already at reasonable levels and that regulation could lead to reduced services and job losses. Some in the business community have also voiced concern that price-control-style regulation could distort market functions.
The political approach is also split. The ruling party is leaning toward stronger regulation in the name of stabilizing livelihoods and easing the burden on small businesses. The opposition, too, can rally around the issue of so-called "platform abuse of power," making it likely that the debate will center not on partisan confrontation but on negotiating the cap level and scope of exemptions. That said, variables such as platform industry lobbying and potential links to trade issues are significant, and a battle over the scope of the legislation appears inevitable.
Legislative Timeline and Market Impact Outlook
Procedurally, the relevant bills are likely to be handled under the jurisdiction of the Fair Trade Commission or the Ministry of SMEs and Startups. Having been raised as an issue during the parliamentary audit, the bills are expected to undergo committee review during the regular session, with public hearings and expert consultation on the basis for calculating the cap and anti-cost-shifting mechanisms to come first. The bills' fate could be determined as early as the first half of next year.
The market impact would be considerable. If the cap is set below current levels, pressure on platform profitability is expected to accelerate moves toward revenue diversification and cost efficiency. Over the longer term, greater fee transparency could extend to improving the structure of ancillary costs such as advertising fees. For small businesses, eased cost burdens could reduce pressure to raise menu prices, potentially delivering indirect benefits to consumers as well. Ultimately, the success of this legislation will depend less on where the numbers are set than on whether effective mechanisms can be put in place to prevent cost shifting.
