South Korea is dramatically simplifying the compensation framework for consumers who incur losses when exchange rates fall during the process of canceling overseas card payments. The Financial Supervisory Service and the Credit Finance Association of Korea announced on the 23rd that they are improving the system so that consumers can automatically receive compensation for foreign exchange losses arising from canceled overseas card payments without filing a separate claim.
Until now, card companies were required in principle to apply the exchange rate at the time of the original payment when canceling overseas transactions, refunding the full won amount the consumer had paid. Losses from exchange rate fluctuations were borne by the card company. However, there were cases where card companies’ computer systems could not automatically locate the original transaction—such as when overseas merchants omitted or incorrectly recorded approval numbers on cancellation slips, or in partial cancellation transactions where only some items from a multi-item purchase were canceled. In these cases, the cancellation-date exchange rate was applied, forcing consumers to identify the FX loss themselves and file a compensation claim with the card company.
In a real-world example, if a consumer pays $100 when the exchange rate is ₩1,400 per dollar, they are charged ₩140,000 (approximately $100). But if the rate subsequently falls to ₩1,300 and the transaction is canceled, they receive only ₩130,000 (approximately $96) back—a loss of ₩10,000 (approximately $7.4). According to the Financial Supervisory Service, one consumer purchased airline tickets for four friends at $5,000 (approximately ₩6.8 million), then canceled one person’s ticket worth $1,250 (approximately ₩1.7 million). Because the exchange rate had fallen from ₩1,480 per dollar at the time of purchase to ₩1,400, the consumer received only ₩1.75 million (approximately $1,300)—₩100,000 (approximately $74) less than the original payment of ₩1.85 million (approximately $1,400). The consumer only recovered the difference after belatedly discovering the discrepancy and filing a claim with the card company.
The core of the improvement plan is upgrading card companies’ computer systems. Card companies will enhance their systems to locate original transactions by cross-referencing other payment information—such as merchant name, payment date, and payment amount—even when some information like approval numbers does not match. Matching logic will also be revised to identify original transactions in partial cancellation cases. For transactions that cannot be confirmed through the computer network, a new procedure will be established where staff members manually review payment records to compensate for FX losses.
Consumer notification methods will also change. Currently, cancellation notices for overseas payments focus primarily on the foreign currency cancellation amount. Going forward, text messages and other notifications will also display the actual won amount being refunded. If the original transaction ultimately cannot be verified and the exchange rate on the cancellation slip receipt date is applied, consumers will be informed of this fact. Card company websites and mobile apps will strengthen guidance so consumers can easily check FX loss compensation eligibility and application procedures.
The recent increase in overseas card spending and heightened exchange rate volatility are also cited as background for the reform. Overseas card spending rose from $19.22 billion (approximately ₩26.1 trillion) in 2023 to $22.91 billion (approximately ₩31.1 trillion) in 2025.
The improvements will be implemented in phases. Card companies will begin providing won-denominated cancellation amount notices in September and will also strengthen guidance on the FX loss compensation system. Computer system upgrades, staff verification procedures, and notices for unverified original transactions will be completed by the end of this year, with implementation planned from 2027.
A Financial Supervisory Service official said, “We will improve the system to reduce the inconvenience of consumers belatedly discovering FX losses and filing separate compensation claims, and to minimize consumer disadvantages arising from overseas card usage.”
The measure is expected to effectively transfer the exchange rate risk that consumers had to bear during overseas payment cancellations to card companies. It is assessed as a strengthened safeguard against unexpected losses from exchange rate fluctuations, particularly as overseas direct purchases and travel-related payments continue to grow. However, until the system upgrades are completed in 2027, some transactions may still require consumer verification, making card companies’ preparation speed and execution capability a key factor to watch.
finance.biggo.com