Mid-Interest Loans and Car Installment Financing... Hana Card Focuses on Business Diversification (Comprehensive)

Launching PLCC next month in partnership with Toss
Mid-interest rate loans launching this month
Auto installment financing also in the second half of the year

[Asia Economy Reporter Ki Ha-young] Hana Card, which suffered a direct hit to its performance last year due to a reduction in merchant fees, is focusing on business diversification this year. While other card companies maintained profitability through business diversification, Hana Card was hit hard with a nearly 40% drop in net income due to a lack of revenue models. Hana Card plans to rebound its performance by promoting new businesses such as mid-interest loans and auto installment financing.

According to the industry on the 6th, Hana Card is scheduled to launch a Private Label Credit Card (PLCC) next month in partnership with the fintech company Toss. Since Toss will be directly involved from product design, the benefits are expected to be enhanced compared to existing Toss-affiliated cards. A Hana Card official said, "We have high expectations for the PLCC to be launched next month," adding, "We expect to attract new customers through Toss, which has over 16 million subscribers."

Hana Card is also responding quickly to the rapidly emerging subscription economy market. This year, Hana Card created a Subscription Economy Department through organizational restructuring. Recently, it also launched the "Tribe Any Plus" card, which offers discount benefits for used car subscription services. The subscription economy is a market that card companies are rushing to enter because it can secure long-term customers based on regular payments.

In addition to expanding credit sales through card issuance, Hana Card is entering the loan market. It plans to launch a mid-interest loan product as early as this month. Card companies that successfully defended their performance despite last year's merchant fee reductions minimized the impact through auto installment financing and other means. Hana Card's mid-interest loans will be available at interest rates ranging from a minimum of 6.9% to a maximum of 13.84%, with a maximum loan amount of up to 50 million KRW. In the second half of the year, it also plans to execute "Auto Loan" (auto installment financing) loans.

In the long term, Hana Card is pursuing various businesses to secure potential customers. The most representative is the rapidly growing local currency business. According to the Ministry of the Interior and Safety, the issuance scale of local currency, which was about 116.8 billion KRW in 2016, increased to 2.3 trillion KRW last year, just three years later. Hana Card is partnering with local governments that want to issue local currency and connecting them with merchants affiliated with Hana Card. For Hana Card, this contributes to revitalizing the local economy while expecting recruitment effects for new customers. Currently, Hana Card has partnerships with five local governments?Busan, Gimpo, Ulsan, Chilgok, and Iksan?and operates services.

Hana Card's move to create new revenue models stems from the judgment that sluggish new business discovery hindered performance improvement. In fact, Hana Card's net income last year was 56.3 billion KRW, a sharp decline of 47.2% compared to the previous year. Due to the high proportion of merchant fees in its revenue compared to other card companies, it recorded the poorest performance among card companies. During the same period, Shinhan Card and Samsung Card posted net incomes of 508.8 billion KRW and 341.1 billion KRW, respectively, with decreases of 2% and 0.3%, which were relatively small. KB Kookmin Card posted a net income of 316.5 billion KRW, an increase of 10.4% from the previous year.

A Hana Card official said, "This year, we plan to start various businesses for business diversification," adding, "We will accelerate performance growth not only through mid-interest loans but also by entering the auto installment financing market in the second half of this year."

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