Card Company Open Banking Service to Start from May (Comprehensive)

Contribution Payment Completed Last Month
Service Scheduled Around May After Computer System Development

[Asia Economy Reporter Ki Ha-young] Card companies will officially launch open banking services starting in May. It is expected that users will be able to check accounts and perform transfers and payments not only for card companies but also for banks, securities firms, and other financial institutions participating in open banking through a single application (app).

According to industry sources on the 10th, card companies are accelerating system development with the goal of opening open banking services in May. The contribution fees for participating in open banking were paid at the end of last month. Financial institutions other than banks must pay a special participation fee to the Korea Financial Telecommunications and Clearings Institute (KFTC) to use the open banking network, and the special participation fee for card companies is known to be between 400 million and 1.2 billion KRW, similar to that of mutual finance and securities firms.

Open banking is a type of financial shared network. It is a joint payment system that allows users to check all bank accounts and perform transfers and payments through a single app, fully implemented in December 2019. Since its launch, the number of users reached 22 million as of September last year. Initially, the participating institutions were limited to banks and fintech companies, but as the Financial Services Commission expanded participation to secondary financial institutions, savings banks, card companies, and others can now participate.

Card companies without accounts will provide customers' card usage information instead of account information. To this end, the KFTC added information providers to be able to use open banking in December last year. This is because financial institutions that can use open banking must have accounts.

Card Companies Expect Synergy with Digital Businesses such as MyData

By participating in open banking, card companies can use the open banking network for card payment withdrawals and merchant payment transfers at low fees. It is also expected to accelerate the development of future growth businesses such as MyData and MyPayment services. Facing profitability deterioration due to reduced main revenue sources such as merchant fee reductions, card companies are preparing to expand their business scope beyond MyData and MyPayment services to comprehensive payment services in line with the digital era.

An industry official said, "Most of the basic preparations for open banking participation, such as institutional improvements and contribution fee burdens for card companies without accounts, have been completed," adding, "After developing the IT system and conducting multiple checks, we are preparing to start the service by the end of May."

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