10th Market Economy Colloquium: Delivery App Fee Caps Only Increase Consumers’ Burden

10th Market Economy Colloquium

Date and Time: 11:00 a.m., November 21, 2025

Venue: Pureun Hall

Topic: Delivery App Fee Caps That Ultimately Only Increase the Burden on Consumers

Presenter: Gwang yong Go, Policy Director at the Center for Free Enterprise (CFE)

Discussants: Iseok Kim, Director of the Market Economy System Research Institute; Jaewook Ahn, Chairman of the Center for Free Enterprise (CFE); Sung-no Choi, President of the Center for Free Enterprise (CFE); and six others

Delivery App Fee Caps That Ultimately Only Increase the Burden on Consumers

Gwang yong Go, Policy Director at the Center for Free Enterprise (CFE)

Recently, after the enactment of the Online Platform Fairness Act stalled in the wake of U.S.-Korea trade negotiations, efforts to introduce a cap on delivery app usage fees have begun in earnest. A proposed amendment to the Act on the Protection and Support of Small Merchants includes a provision to impose an upper limit on delivery app commissions, and the Seoul Metropolitan Government, together with Shinhan Bank, is actively supporting the public delivery app “Ttaenggyeoyo.” The stated justification is to protect small business owners. However, whether such policies truly benefit all market participants requires careful examination.

The delivery app market is already generating rapidly increasing consumer benefits amid fierce service competition among companies such as Baedal Minjok and Coupang Eats. For self-employed business owners dissatisfied with high commissions, a range of alternatives has emerged, including direct transactions, smaller platforms, and their own delivery apps. In this situation, if the government steps in directly to regulate prices, it is highly likely to dampen private-sector innovation and instead undermine market efficiency.

The experience of public delivery apps confirms these concerns. “Ttaenggyeoyo” was launched with low commissions and various discount benefits at the forefront, but its market share remains minimal. Consumers do not choose platforms based on price alone. Overall service quality—including payment convenience, rider connectivity, app stability, and the review system—is the core competitive factor. When the public sector injects tax money to artificially create price competitiveness, the result is ultimately nothing more than a distorted price signal.

An even bigger problem is the need for continuous budgetary support. The Seoul Metropolitan Government and the Ministry of Agriculture, Food and Rural Affairs are spending tens of billions of won on promoting public delivery apps and consumer coupon programs. But once fiscal support is cut off, public apps will struggle to maintain competitiveness. While the private sector seeks to improve services based on self-sustaining profits, the public sector moves according to political justification, making it inevitably lag behind in both sustainability and innovation. In the end, this creates the inefficiency of maintaining a platform with tax money that is more costly than private alternatives.

A cap on delivery commissions causes even more direct market distortion. Commissions are not simply brokerage costs; they are payment for the integrated services platforms provide, including payment processing, advertising, data analysis, and rider matching. If these are artificially restricted, platforms will have no choice but to pass on the costs in other ways. If higher advertising fees, reduced rider incentives, or restrictions on merchant entry follow, both small merchants and consumers will ultimately suffer.

International cases also offer important lessons. During the COVID-19 period, major U.S. cities such as New York and San Francisco introduced commission caps, but soon experienced side effects. Platforms shifted lost revenue onto consumer charges, causing delivery fees to rise instead. Order volume then dropped sharply. In the end, many cities had no choice but to repeal or ease the policy. A policy that began with good intentions ended up producing the opposite effect: market distortion and reduced services.

Policies to help small merchants are necessary. But they must not take the form of infringing on market autonomy and weakening the private sector’s innovative drive. What the central and local governments should do is not to impose fee caps or foster public apps.

The public sector’s role should be to ensure fair competition among platforms, increase transparency in fee structures, and make market entry easier for smaller platforms. Excessive intervention in the delivery app market will ultimately come back as a burden and harm not only to consumers, but also to small merchants and delivery riders alike.

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Original title: 제10회: 결국 소비자 부담만 키우는 배달앱 수수료 상한제

Author: Market Economy Colloquium

Date: 2025-11-21

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=collo&pn=1&idx=28272