Profitability Decline... Card Companies Eyeing 'Overseas Remittance Services' (Comprehensive)

Claiming Fees of 3,000~5,000 Won to Target the Overseas Remittance Market

[Asia Economy Reporter Ki Ha-young] The card industry is increasingly entering the overseas remittance service market, which has been led by banks and fintech companies. They are aiming to secure new revenue sources by offering low fees and fast remittance speeds.

According to the industry on the 31st, card companies plan to expand their overseas remittance services this year. This is because, under 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. Before the law was amended, overseas remittances were only possible through banks or small overseas remittance companies.

Lotte Card plans to expand the countries to which it sends money to more than 20, including China and Canada, and to enable remittances between individuals and corporations. In December last year, Lotte Card launched the overseas remittance service independently without partnering with banks for the first time among card companies. 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 also up to 2 days, faster than the typical 3 to 5 days required by banks. Real-time remittance is possible in some countries such as the UK, Vietnam, and Singapore. Currently, remittances can be sent in 10 currencies to 11 countries (the United States, the United Kingdom, Germany, France, Japan, Australia, Indonesia, Vietnam, the Philippines, Singapore, and Thailand).

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." To commemorate the launch of the overseas remittance service, Lotte Card is also holding an event waiving all remittance fees until the end of March.

KB Kookmin Card is expected 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 remittance service this year through partnerships with 66 countries.

Earlier, Hyundai Card was the first among card companies to introduce an overseas remittance service 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 to diversify their revenue sources to compensate for the declining profits caused by reduced merchant fees. According to "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 official said, "Card companies with already established overseas networks do not need to pay intermediary fees, so they can 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.