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Korean credit card firms are working to build their own international networks hoping to reduce dependence on Visa and MasterCard.
Local credit cardholders and issuers pay tens of billions of won every year as royalties and commission to the multinational credit card giants. Visa and MasterCard have a combined market share of about 92 percent in Korea.
Visa or MasterCard-branded credit cardholders pay 1 percent of the amount they spend abroad as commission to the duopoly. Koreans spent some $8.62 billion, or about 10.12 trillion won, overseas by swiping their credit cards last year, according to the Bank of Korea.
Local credit card issuers pay 0.2 percent of overseas transactions and 0.04 percent of domestic transactions as fees to Visa and MasterCard. They paid 108.4 billion won ($94 million) in 2010 based on their sales.
“With credit card spending on a constant rise, local card companies are finding the fees to Visa and MasterCard increasingly burdensome,” an official at the Credit Finance Association said.
BC Card, Korea’s credit card payment services provider, has been at the forefront of efforts to find alternative international partners.
It created the BC Global Card in April last year under partnerships with credit card companies in 103 countries including Japan’s JCB, China UnionPay and Discover Financial Service of the U.S. which acquired Diners Club International.
It is the first Korean brand credit card that can be used both at home and abroad without paying fees to multinational card brands such as Visa, MasterCard or JCB. No commissions are charged to cardholders for overseas transactions, and the annual fee is only 2,000 won, the same as domestically used credit cards.
About 1.7 million BC Global Cards have been issued so far, logging some $9.36 million in overseas transactions.
BC Card was also the first in the local card industry to establish ties with China UnionPay, the only domestic bank card issuer in China.
Operating under the approval of the People’s Bank of China, CUP is the only interbank network in mainland China that links the ATMs of 14 major banks and many more smaller banks.
Under a partnership contract signed in 2005, BC Card started issuing BC-CUP cards in March 2008. About 1.5 million BC-CUP cards have been issued so far.
Lotte Card, Shinhan Card and KB Kookmin Card are also joining the move.
Shinhan Card, which began issuing credit cards in Vietnam last year through cooperation with Shinhan Bank, took the first step to enter the credit card business in China by signing a preliminary deal with CUP in March to cooperate for business in each other’s country.
“It was the first time CUP agreed to support a foreign credit card firm’s business in China including issuing credit cards to local customers,” a Shinhan Card official said.
“We have organized a task force that is reviewing the credit card business in China and will seek personnel exchanges with CUP.”
Shinhan Card also launched the URS Brand Card in partnership with JCB International in 2010. The card, which can be used in some 170 million JCB member stores worldwide at an annual fee for domestic cards, attracted over 3 million users so far.
KB Kookmin Card inked a deal with CUP in May to expand partnership starting with issuing CUP credit cards in Korea.
KB Kookmin-CUP credit cards are scheduled to be introduced in August, and check cards, or debit cards, early next year.
Earlier this month, KB Kookmin launched check cards for clients of the Industrial and Commercial Bank of China residing in Korea so they can access their ICBC accounts using KB Kookmin’s ATMs.
Lotte Card also joined hands with CUP to introduce the Lotte Point Plus Penta Card which can be used in some 2.2 million CUP member stores and ATMs in China without paying commissions.
In 2008, Lotte unveiled PiTaPa cards which Korean travelers can use to pay for public transportation in Japan’s Kansai region.
Samsung Card and Hana SK Card said they were seeking partnerships with CUP.
By Kim So-hyun (sophie@heraldcorp.com)
Local credit cardholders and issuers pay tens of billions of won every year as royalties and commission to the multinational credit card giants. Visa and MasterCard have a combined market share of about 92 percent in Korea.
Visa or MasterCard-branded credit cardholders pay 1 percent of the amount they spend abroad as commission to the duopoly. Koreans spent some $8.62 billion, or about 10.12 trillion won, overseas by swiping their credit cards last year, according to the Bank of Korea.
Local credit card issuers pay 0.2 percent of overseas transactions and 0.04 percent of domestic transactions as fees to Visa and MasterCard. They paid 108.4 billion won ($94 million) in 2010 based on their sales.
“With credit card spending on a constant rise, local card companies are finding the fees to Visa and MasterCard increasingly burdensome,” an official at the Credit Finance Association said.
BC Card, Korea’s credit card payment services provider, has been at the forefront of efforts to find alternative international partners.
It created the BC Global Card in April last year under partnerships with credit card companies in 103 countries including Japan’s JCB, China UnionPay and Discover Financial Service of the U.S. which acquired Diners Club International.
It is the first Korean brand credit card that can be used both at home and abroad without paying fees to multinational card brands such as Visa, MasterCard or JCB. No commissions are charged to cardholders for overseas transactions, and the annual fee is only 2,000 won, the same as domestically used credit cards.
About 1.7 million BC Global Cards have been issued so far, logging some $9.36 million in overseas transactions.
BC Card was also the first in the local card industry to establish ties with China UnionPay, the only domestic bank card issuer in China.
Operating under the approval of the People’s Bank of China, CUP is the only interbank network in mainland China that links the ATMs of 14 major banks and many more smaller banks.
Under a partnership contract signed in 2005, BC Card started issuing BC-CUP cards in March 2008. About 1.5 million BC-CUP cards have been issued so far.
Lotte Card, Shinhan Card and KB Kookmin Card are also joining the move.
Shinhan Card, which began issuing credit cards in Vietnam last year through cooperation with Shinhan Bank, took the first step to enter the credit card business in China by signing a preliminary deal with CUP in March to cooperate for business in each other’s country.
“It was the first time CUP agreed to support a foreign credit card firm’s business in China including issuing credit cards to local customers,” a Shinhan Card official said.
“We have organized a task force that is reviewing the credit card business in China and will seek personnel exchanges with CUP.”
Shinhan Card also launched the URS Brand Card in partnership with JCB International in 2010. The card, which can be used in some 170 million JCB member stores worldwide at an annual fee for domestic cards, attracted over 3 million users so far.
KB Kookmin Card inked a deal with CUP in May to expand partnership starting with issuing CUP credit cards in Korea.
KB Kookmin-CUP credit cards are scheduled to be introduced in August, and check cards, or debit cards, early next year.
Earlier this month, KB Kookmin launched check cards for clients of the Industrial and Commercial Bank of China residing in Korea so they can access their ICBC accounts using KB Kookmin’s ATMs.
Lotte Card also joined hands with CUP to introduce the Lotte Point Plus Penta Card which can be used in some 2.2 million CUP member stores and ATMs in China without paying commissions.
In 2008, Lotte unveiled PiTaPa cards which Korean travelers can use to pay for public transportation in Japan’s Kansai region.
Samsung Card and Hana SK Card said they were seeking partnerships with CUP.
By Kim So-hyun (sophie@heraldcorp.com)
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Articles by Korea Herald
