The Booming PLCC Market... Intense Competition Among Card Companies to Secure Future Growth Opportunities

All 7 Major Credit Card Companies Launch 5 New Types in Q1
Strategic Moves to Secure Future Growth Areas Like Comprehensive Payment Services
PLCC Releases Expected to Continue as Part of Strategic Partnerships

[Asia Economy Reporter Ki Ha-young] Private Label Credit Cards (PLCC) have become the dominant trend in the domestic market just six years after their introduction. As big tech companies (large information and communication enterprises) enter the payment market, which was once dominated solely by credit card companies, competition has intensified, leading to a surge in PLCCs as part of strategic partnerships aimed at securing future leadership.

According to the card industry on the 5th, all seven full-service card companies this year (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana) have entered the PLCC market, with five types of PLCCs launched in the first quarter alone. Notably, last month Shinhan Card released the 'Marriott Shinhan Card,' Lotte Card introduced the Bank Salad PLCC called the 'Straw Card,' and KB Kookmin Card launched its first PLCC, the 'Coffee Bean PLCC.' In May, Samsung Card will release its first-ever 'KakaoPay PLCC.' Hyundai Card is also planning to introduce the 'Naver PLCC' in the second half of this year.

PLCCs are cards created through collaboration between partner companies such as retailers and credit card companies. Since Hyundai Card first introduced the 'Emart e-Card' in 2015, the first PLCC in the domestic market, the number of PLCCs has increased annually: three in 2017, six in 2018, seven in 2019, and 14 in 2020. Initially, collaborations were frequent with retailers like Emart and Homeplus, but recently, partner companies have diversified to include fintech, airlines, and coffee businesses. PLCCs differ from co-branded cards in that both partners share costs and revenues jointly. They collaborate on card design, expenses, profits, and marketing. For card companies, this model offers the advantage of reducing initial costs while acquiring a diverse customer base.

The PLCC boom is largely attributed to Hyundai Card, which played a pioneering role. Hyundai Card increased its individual membership and reduced recruitment costs through PLCCs, generating profits and demonstrating the potential for success, prompting others to enter the PLCC market. In fact, Hyundai Card has expanded its market share by nearly 2% over the past two years through PLCCs, closely trailing Samsung and KB Kookmin Cards. In the fourth quarter, excluding corporate credit sales, Hyundai Card recorded a 17.69% share in individual credit sales, surpassing KB Kookmin Card (17.34%) to rank third.

The PLCC craze in the card industry is expected to continue for the time being. Hyundai Card plans to maintain its PLCC partnerships with industry leaders as it has done so far. By collaborating with top companies in each sector, it aims to build a data alliance that combines Hyundai Card’s payment data to create new revenue models. Shinhan Card plans to expand PLCC partnerships with global brands, focusing on global and premium markets. In the second half of the year, it aims to secure competitiveness comparable to big tech PLCCs by targeting the MZ generation with new PLCCs. Lotte Card intends to expand cooperation with digital and fintech companies to gain a first-mover advantage in new markets.

Professor Seo Ji-yong of the Department of Business Administration at Sangmyung University said, "As fintech enters the payment market and competition intensifies, credit card companies are forming alliances with fintech firms that have platform competitiveness." He added, "The networks built through PLCCs are advantageous for securing future revenue streams such as comprehensive payment services, so the launch of PLCCs by card companies is expected to continue for the time being."

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