Financial Cards in South Korea
Euromonitor International's Financial Cards in South Korea report establishes the size and structure of the market for ATMs, credit cards, debit cards, store cards and smart cards. It looks at key players in the market (issuers and operators), number of cards in circulation, numbers transactions and value of transactions. It offers strategic analysis of sector forecasts and trends to watch.
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Tables: 98 | Publication date: Mar 2008
Why buy this report
- Get insight into trends in market performance
- Pinpoint growth sectors and identify factors driving change
- Identify market and brand leaders and understand the competitive environment
Product coverage
Financial cards in circulation; Transactions
Executive summary
Use of cheque cards (debit cards) is encouraged by the government
Since the end of the 1990s, the South Korean government has begun to implement a tax system embracing credit cards as a payment method as a way of preventing tax evasion by merchants. Individual cardholders are entitled to tax deductions for expenditure paid by cards when filing a tax return. A greater tax deduction (20%) is granted for expenditure paid by cheque cards than that (15%) for expenditure paid by credit cards.
Increased credit card issuances cause concern
South Korea experienced a credit card crisis in 2002 as a result of rampant credit card issuances and uncontrolled card use for cash services. As the number of cards increased over the three years to 2007, market analysts expressed their concern about a possible credit card fiasco. However, the financial watchdog responded optimistically to the decreasing use of cash, which was blamed for the 2002 credit card crisis.
Credit cards are segmented according to incentives
With competition heating up among credit cards, issuers are scrambling to make their products more attractive to customers by loading their cards with a wealth of incentives, including reward points and discounts. Most cards offered both reward points and discounts at certain merchants. However, credit card companies began to differentiate their products by offering either reward points or discounts to best meet the different needs of their customers. Although cardholders earn reward points, they are required to accumulate a certain number of points before being able to use them. Consequently, the rewards system does not appeal to those people who do not use their cards frequently, and increased discounts without reward points would be more attractive to them.
Point-of-sale infrastructure is not ready to switch to smart cards
In 2003, the Financial Supervisory Service announced plans to replace magnetic strip credit cards with chip-based cards in South Korea by 2008, in compliance with international efforts. Since the announcement, credit card companies have begun to issue chip-based smart cards, but these cards still have a magnetic strip on the back to make them readable by conventional point-of-sale terminals. However, the penetration of smart card readers has been so slow that only a minority of merchants were equipped with them in 2006. As VAN operators are mostly small and medium-sized companies, the supply of expensive smart card readers, costing about Won200,000 per unit, poses a significant financial burden to them. While VAN operators intend to supply smart card readers to major merchants that deal with more than one million cards a year, the financial authority is maintaining a tough stance on the adoption of chip card technology as scheduled. The two parties are holding talks to seek a solution.
Changed consumer behaviour in using credit cards
There was a time in the early 2000s when local consumers used credit cards as a source of cash in the event of emergencies as withdrawing cash from ATMs using a credit card was so easy for cardholders. However, cash withdrawals made by cardholders have steadily declined since the 2003 credit card crisis. Cardholders increasingly prefer to settle their purchases with one-off payments instead of instalment payments, and the use of credit cards for petty cash purchases, for say less than Won10,000, has soared since 2000. It is assumed that increased consumer alertness with regard to high interest rates charged for cash services resulted in decreased use of cash services. The increased use of credit cards for petty cash purchases reflects a widespread use of credit cards among South Korean consumers.
Preferred method of payment in the future
Credit cards will be preferred as the main payment method in South Korea given convenience, tax benefits and perks such as reward points and discounts. The penetration of credit card acceptance will increase as the government is poised to force every self-owned business to accept cards in the coming years.
Table of contents
FINANCIAL CARDS IN SOUTH KOREA : MARKET INSIGHT
EXECUTIVE SUMMARY
Use of cheque cards (debit cards) is encouraged by the government
Increased credit card issuances cause concern
Credit cards are segmented according to incentives
Point-of-sale infrastructure is not ready to switch to smart cards
Changed consumer behaviour in using credit cards
Preferred method of payment in the future
KEY TRENDS AND DEVELOPMENTS
Consumers shun cash services
Installation of smart card readers an obstacle to fully fledged smart card use
Fierce competition led to lavish credit card perks
OPERATING ENVIRONMENT
Consumer credit and lending
Issuer Fraud
Acquirer fraud
E-commerce
M-commerce
ATM and POS terminals
Cash Withdrawal vs Card purchase
Governmental regulation and legislation
MARKET INDICATORS
Table 1 Number of POS Terminals 2004-2007
Table 2 Number of ATMs 2004-2007
Table 3 Disposable Income 2002-2007
Table 4 Consumer Credit 2002-2007
Table 5 Value Lost to Fraud 2002-2007
MARKET DATA
Table 6 Financial Cards: Transactions 2002-2007
Table 7 Financial Cards: Value 2002-2007
Table 8 Financial Cards: Number of Cards in Circulation 2002-2007
Table 9 Financial Cards: Number of Accounts 2002-2007
Table 10 Domestic versus Foreign Spend 2007
Table 11 Card Expenditure by Sector 2007
Table 12 Card Expenditure by Location 2007
Table 13 Financial Cards: Number of Internet Transactions 2002-2007
Table 14 Financial Cards: Internet Transaction Value 2002-2007
Table 15 Financial Cards: Number of Cards by Issuer 2002-2006
Table 16 Financial Cards: Number of Cards by Operator 2002-2006
Table 17 Financial Cards: Point of Sale Transactions by Acquirer 2002-2006
Table 18 Financial Cards Forecast: Transactions 2007-2012
Table 19 Financial Cards Forecast: Value 2007-2012
Table 20 Financial Cards Forecast: Number of Cards in Circulation 2007-2012
Table 21 Financial Cards Forecast: Number of Internet Transactions 2007-2012
Table 22 Financial Cards Forecast: Internet Transaction Value 2007-2012
DEFINITIONS
Cards by Type
Cardholder Behaviour
Card Expenditure by Sector
Value Lost to Card Fraud
Consumer Credit
Market Background
Summary 1 Research Sources
LOCAL COMPANY PROFILES - SOUTH KOREA
BC CARD CO LTD - FINANCIAL CARDS - SOUTH KOREA
STRATEGIC DIRECTION
KEY FACTS
Summary 2 BC Card Co Ltd: Key Facts
Summary 3 BC Card Co Ltd: Operational Indicators
COMPANY BACKGROUND
COMPETITIVE POSITIONING
HYUNDAI CARD CO LTD - FINANCIAL CARDS - SOUTH KOREA
STRATEGIC DIRECTION
KEY FACTS
Summary 4 Hyundai Card Co Ltd: Key Facts
Summary 5 Hyundai Card Co Ltd: Operational Indicators
COMPANY BACKGROUND
COMPETITIVE POSITIONING
LG CARD CO LTD - FINANCIAL CARDS - SOUTH KOREA
STRATEGIC DIRECTION
KEY FACTS
Summary 6 LG Card Co Ltd: Key Facts
Summary 7 LG Card Co Ltd: Operational Indicators
COMPANY BACKGROUND
COMPETITIVE POSITIONING
LOTTE CARD CO LTD - FINANCIAL CARDS - SOUTH KOREA
STRATEGIC DIRECTION
KEY FACTS
Summary 8 Lotte Card Co Ltd: Key Facts
Summary 9 Lotte Card Co Ltd: Operational Indicators
COMPANY BACKGROUND
COMPETITIVE POSITIONING
SHINHAN CARD CO LTD - FINANCIAL CARDS - SOUTH KOREA
STRATEGIC DIRECTION
KEY FACTS
Summary 10 Shinhan Card Co Ltd: Key Facts
Summary 11 Shinhan Card Co Ltd: Operational Indicators
COMPANY BACKGROUND
COMPETITIVE POSITIONING
SMART CARDS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 23 Smart Cards Sector Performance: 2002-2007
Table 24 Smart Cards Sector Performance: % Growth 2002-2007
Table 25 Smart Cards: Memory Vs Microprocessor 2004-2007
Table 26 Smart Cards: Contact Vs Contactless 2004-2007
Table 27 Smart Cards: Forecast Sector Performance: 2007-2012
Table 28 Smart Cards: Forecast Sector Performance: % Growth 2007-2012
ATM TRANSACTIONS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 29 ATM Cards Sector Performance: 2002-2007
Table 30 ATM Cards Sector Performance: % Growth 2002-2007
Table 31 ATM Cards: Forecast Sector Performance: 2007-2012
Table 32 ATM Cards: Forecast Sector Performance: % Growth 2007-2012
DEBIT TRANSACTIONS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 33 Debit Cards Sector Performance: 2002-2007
Table 34 Debit Cards Sector Performance: % Growth 2002-2007
Table 35 Debit Cards: Number of Cards by Issuer 2002-2006
Table 36 Debit Cards: Number of cards by Operator 2002-2006
Table 37 Debit Cards Transactions by Acquirer 2002-2006
Table 38 Debit Cards: Forecast Sector Performance: 2007-2012
Table 39 Debit Cards: Forecast Sector Performance: % Growth 2007-2012
CREDIT CARD TRANSACTIONS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 40 Credit Cards Sector Performance: 2002-2007
Table 41 Credit Cards Sector Performance: % Growth 2002-2007
Table 42 Personal Credit Cards Sector Performance: 2002-2007
Table 43 Personal Credit Cards Sector Performance: % Growth 2002-2007
Table 44 Corporate Credit Cards: Sector Performance: 2002-2007
Table 45 Corporate Credit Cards: Sector Performance: % Growth 2002-2007
Table 46 Credit Cards: Number of Cards by Issuer 2002-2006
Table 47 Credit Cards: Number of cards by Operator 2002-2006
Table 48 Credit Cards Transactions by Acquirer 2002-2006
Table 49 Personal Credit Cards Transactions by Acquirer 2002-2006
Table 50 Corporate Credit Cards Transactions by Acquirer 2002-2006
Table 51 Credit Cards: Forecast Sector Performance: 2007-2012
Table 52 Credit Cards: Forecast Sector Performance: % Growth 2007-2012
Table 53 Personal Credit Cards: Forecast Sector Performance: 2007-2012
Table 54 Personal Credit Cards: Forecast Sector Performance: % Growth 2007-2012
Table 55 Corporate Credit Cards: Forecast Sector Performance: 2007-2012
Table 56 Corporate Credit Cards: Forecast Sector Performance: % Growth 2007-2012
CHARGE CARD TRANSACTIONS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 57 Charge Cards Sector Performance: 2002-2007
Table 58 Charge Cards Sector Performance: % Growth 2002-2007
Table 59 Personal Charge Cards Sector Performance: 2002-2007
Table 60 Personal Charge Cards Sector Performance: % Growth 2002-2007
Table 61 Corporate Charge Cards: Sector Performance: 2002-2007
Table 62 Corporate Charge Cards: Sector Performance: % Growth 2002-2007
Table 63 Charge Cards: Number of Cards by Issuer 2002-2006
Table 64 Charge Cards: Number of cards by Operator 2002-2006
Table 65 Charge Cards Transactions by Acquirer 2002-2006
Table 66 Personal Charge Cards Transactions by Acquirer 2002-2006
Table 67 Corporate Charge Cards Transactions by Acquirer 2002-2006
Table 68 Charge Cards: Forecast Sector Performance: 2007-2012
Table 69 Charge Cards: Forecast Sector Performance: % Growth 2007-2012
Table 70 Personal Charge Cards: Forecast Sector Performance: 2007-2012
Table 71 Personal Charge Cards: Forecast Sector Performance: % Growth 2007-2012
Table 72 Corporate Charge Cards: Forecast Sector Performance: 2007-2012
Table 73 Corporate Charge Cards: Forecast Sector Performance: % Growth 2007-2012
PRE-PAID CARD TRANSACTIONS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 74 Pre-paid Cards Sector Performance: 2002-2007
Table 75 Pre-paid Cards Sector Performance: % Growth 2002-2007
Table 76 Pre-paid Cards: Number of Cards by Issuer 2002-2006
Table 77 Pre-paid Cards: Number of cards by Operator 2002-2006
Table 78 Pre-paid Cards Transactions by Acquirer 2002-2006
Table 79 Pre-paid Cards by Type 2004-2007
Table 80 Pre-paid Cards: Forecast Sector Performance: 2007-2012
Table 81 Pre-paid Cards: Forecast Sector Performance: % Growth 2007-2012
STORE CARD TRANSACTIONS IN SOUTH KOREA
HEADLINES
TRENDS
COMPETITIVE LANDSCAPE
PROSPECTS
SECTOR DATA
Table 82 Store Cards Sector Performance: 2002-2007
Table 83 Store Cards Sector Performance: % Growth 2002-2007
Table 84 Store Cards: Number of Cards by Issuer 2002-2006
Table 85 Store Cards Transactions by Acquirer 2002-2006
Table 86 Store Cards: Forecast Sector Performance: 2007-2012
Table 87 Store Cards: Forecast Sector Performance: % Growth 2007-2012