Card Companies Seeking New Revenue Streams Focus on 'Overseas Remittance Services'

Fierce Competition with Low Fees

[Asia Economy Reporter Ki Ha-young] The card industry is increasingly entering the overseas remittance service market, which had been led by banks and fintech companies. Following the revised Foreign Exchange Transactions Act, card companies are now allowed to handle overseas remittances up to $5,000 per transaction and $50,000 annually, leading to an expansion of their services. Before the law revision, overseas remittances were only possible through banks or small overseas remittance providers. They are aiming to secure new revenue sources by offering lower fees and faster remittance speeds.

According to the industry on the 31st, KB Kookmin Card plans to launch its overseas remittance service around next month. KB Kookmin Card is currently focusing on final checks for service commercialization. Visa, the world's largest payment network company, also plans to launch a corporate-to-corporate remittance service this year in partnership with 66 countries.

Lotte Card plans to expand its remittance countries to more than 20, including China and Canada, and enable remittances between individuals and corporations this year. In December last year, Lotte Card became the first card company to launch an overseas remittance service independently without bank partnerships. The remittance fee for the 'Lotte Card Overseas Remittance Service,' which allows foreign currency remittance via a mobile app, ranges from 3,000 to 5,000 KRW (varies by country), which is cheaper than banks.

The average remittance time by country is up to 2 days, faster than the typical 3 to 5 days required by banks. Real-time remittance is also possible in some countries such as the United Kingdom, Vietnam, and Singapore. Currently, remittances can be sent to 11 countries (United States, United Kingdom, Germany, France, Japan, Australia, Indonesia, Vietnam, Philippines, Singapore, Thailand) in 10 different currencies.

A Lotte Card official said, "In the future, even if the recipient does not have a bank account, we plan to add a remittance method that allows immediate cash receipt at 550,000 stores, enabling remittances to about 220 countries."

Earlier, Hyundai Card was the first among card companies to introduce overseas remittance services in April 2018. This service, in partnership with Shinhan Bank, reduced overseas remittance time to a maximum of three days and lowered the remittance fee to 3,000 KRW per transaction.

The reason card companies are entering the remittance market is the urgent need for revenue diversification to replace the declining profits caused by reduced merchant fees. According to the 'Changes and Prospects of the Domestic Overseas Remittance Market' published by Hana Financial Management Research Institute, the size of the domestic overseas remittance market increased by more than 50% in three years, from $8.72 billion in 2015 to $13.4 billion in 2018.

An industry insider said, "Card companies with already established overseas networks do not need to pay intermediary fees, allowing them to lower overseas remittance fees," adding, "As the domestic overseas remittance market grows, competition in overseas remittance services emphasizing low fees is expected to intensify."

This content was produced with the assistance of AI translation services.