Delivery App Fee Caps That Raise Consumer Costs Require Careful Review

In the aftermath of the recent Korea-U.S. trade negotiations, the enactment of the Online Platform Fairness Act has stalled, and efforts to introduce a cap on delivery app usage fees are now being pushed in earnest. A proposed amendment to the Small Business Act includes a provision to place an upper limit on delivery app commissions, while the Seoul Metropolitan Government, together with Shinhan Bank, is actively supporting the public delivery app “Ddangyo.” The justification is to protect small business owners. However, careful examination is needed as to whether such policies truly benefit all market participants.

In the delivery app market, consumer benefits are already increasing rapidly amid fierce service competition among companies such as Baedal Minjok and Coupang Eats. For self-employed business owners dissatisfied with high commissions, various alternatives have emerged, including direct transactions, smaller platforms, and proprietary 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. “Ddangyo” launched with low commissions and various discount benefits at the forefront, but its market share remains negligible. Consumers do not choose platforms based on price alone. Comprehensive service quality—including payment convenience, connection with delivery riders, app stability, and review systems—is the core element of competition. A method in which the public sector injects tax money to artificially create price competitiveness is 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. However, once fiscal support is cut off, public apps will have difficulty maintaining competitiveness. While private firms pursue service advancement based on self-sustaining profits, the public sector moves according to political justification, making it inevitably lag behind in sustainability and innovation. In the end, this creates the inefficiency of maintaining, with tax money, a platform that is more expensive than those in the private sector.

A cap on delivery commissions causes even more direct market distortion. Commissions are not simply intermediary fees, but compensation for the comprehensive services platforms provide, including payment, advertising, data analysis, and connecting delivery riders. If these are artificially restricted, platforms will have no choice but to pass on the costs in other ways. If this leads to higher advertising fees, reduced incentives for delivery riders, or restrictions on merchant entry, both small business owners and consumers will ultimately suffer.

Overseas cases are also instructive. 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, and order volumes plunged sharply. As a result, many cities had no choice but to repeal or ease the system. A policy that began with good intentions ended up producing the adverse effects of market distortion and reduced services.

Policies to help small business owners are necessary. However, they should not take the form of infringing on market autonomy and weakening the private sector’s capacity for innovation. What the central and local governments should do is not to force commission caps or foster public apps.

The proper public role should be to ensure fair competition among platforms, increase transparency in commission structures, and make it easier for smaller platforms to enter the market. Excessive intervention in the delivery app market will ultimately impose burdens and cause harm not only to consumers, but also to small business owners and delivery riders alike.

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

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Original title: 소비자 부담 키우는 배달앱 수수료 상한제, 면밀한 검토 필요

Author: Gwang yong Go

Date: 2025-09-05

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&idx=28036