Contactless Payments Surge... But Mobile-Only Card Issuance Drops 10% (Comprehensive)

Issuance Rate Below 10% for 3 Years
Mobile Card Launched to Enhance Untact Consumer Benefits Amid Increased Contactless Payments Due to COVID-19 This Year

[Asia Economy Reporter Ki Ha-young] Although non-face-to-face payments have rapidly grown this year due to the impact of the novel coronavirus disease (COVID-19), the issuance rate of mobile-only cards was found to be less than 10%.

According to the card industry on the 18th, as of the end of September this year, mobile-only cards accounted for 8.3% of newly issued personal credit cards. This is based on four companies that handle mobile-only cards (Shinhan, KB Kookmin, Woori, and Hana Card).

The issuance of mobile-only cards has remained below 10% for three consecutive years. It recorded 7.3% at the end of 2018 and 8.4% at the end of 2019. Considering that about 100 million credit cards are newly issued each year, fewer than 10 million mobile-only cards have been issued. However, the industry explains that if cases where both plastic physical cards and mobile cards are issued simultaneously are included, the proportion of mobile cards in total card issuance could be higher.

Mobile-only cards first entered the market in 2015 when Hana Card launched 'MobiOne.' Riding the fintech wave, starting with Hana Card, Shinhan, KB Kookmin, Woori, and BC Card introduced mobile cards, but they failed to differentiate themselves from physical cards and thus did not capture consumers' attention. In particular, with the introduction of Samsung Pay in the second half of 2015, which allows plastic cards to be registered on smartphones for payment, mobile cards were largely ignored by consumers.

Card Companies Strengthen Untact Benefits and Continuously Launch Mobile-Only Products

This year, card companies have been releasing mobile-only products one after another again, as untact consumption has expanded due to COVID-19. In fact, non-face-to-face payments have been rapidly increasing this year. According to the Bank of Korea, non-face-to-face payments through mobile devices such as smartphones increased by 17.0% year-on-year as of September this year due to COVID-19. In contrast, physical card payments decreased by 5.6%. Also, for the first time, credit card payments for e-commerce exceeded 10 trillion won in a single month. In September, nationwide e-commerce and telecommunication sales credit card payments surged 35.1% year-on-year to 10.2943 trillion won.

In response to this trend, card companies are launching mobile cards by enhancing untact consumption benefits such as simple payments, online shopping, and delivery applications (apps). Since these are mobile-only cards, they can be used immediately upon issuance. Starting with Hana Card's 'Modu-ui Shopping' in May, Shinhan Card's 'YaY,' KB Kookmin Card's 'KB MyFit,' Woori Card's 'Card-ui Jeongseok Untact Air,' and BC Card's 'B Digital' have been introduced one after another.

Hana Card's Modu-ui Shopping offers basic benefits of 5-10% points accumulation in online and offline shopping sectors, while Shinhan Card's YaY introduced the industry's first 'Mariage' service, which provides benefits when using real-time online video (OTT) services and food delivery services together. KB MyFit Card features benefits for simple payments, shopping, and delivery sectors, as well as convenient use at offline merchants. Woori Card's Card-ui Jeongseok Untact Air also includes subscription economy and utility bill services.

Opinions on the outlook for mobile-only cards are divided. A card company official said, "As the proportion of mobile payments increases, mobile-only cards will also increase," adding, "Considering various management costs involved with existing plastic cards, mobile cards will become more active."

Another industry official said, "The simple payment market, including Samsung Pay, Naver Pay, and Kakao Pay, is gradually growing," and predicted, "Since simple payment services can be used without issuing mobile-only cards, explosive growth of mobile-only cards may be difficult to expect."

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