Heated PLCC Market... Intense Competition Among Card Companies to Secure Future Growth (Comprehensive)

All 7 Major Card Companies Launch 5 New Types in Q1
Strategic Move 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 'Straw Card,' a Bank Salad PLCC, and KB Kookmin Card unveiled its first PLCC, the 'Coffee Bean PLCC.' In May, Samsung Card will launch 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 'E-Mart 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 E-Mart and Homeplus, but recently, partner companies have diversified to fintech, airlines, coffee shops, and more. PLCCs differ from co-branded cards in that both partners share costs and revenues jointly. From card design to expenses and profits, they share responsibilities and marketing efforts. For card companies, this means 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 Boom This Year Is Expected to Continue Under the Promotion of 'Comprehensive Payment Services'

The PLCC craze in the card industry is expected to continue for the time being. Hyundai Card plans to maintain its cooperation with industry leaders as it has done so far. By partnering with top companies in each sector, Hyundai Card aims to build a data alliance, combining its payment data to create new revenue models. Shinhan Card plans to expand PLCC partnerships with global brands, aiming to compete on a global and premium level. In the second half of the year, it intends to secure competitive strength against big tech PLCCs by targeting the MZ generation with new PLCCs. Lotte Card plans to expand cooperation with digital and fintech companies to gain a first-mover advantage in new markets. KB Kookmin Card and Woori Card also plan to actively promote PLCCs depending on their partners' cooperation conditions.

Experts analyze that the entry of fintech into the financial market has ignited the launch of PLCCs by card companies. With the amendment of the Electronic Financial Transactions Act anticipated and the expected rise of big tech including fintech, card companies plan to strengthen competitiveness in new businesses such as comprehensive payment services and MyPayment through partnerships with these companies. In other words, they intend to focus on increasing potential market share in the future through strategic cooperation with fintech firms that have platform competitiveness.

Professor Seo Ji-yong of the Department of Business Administration at Sangmyung University said, "As fintech enters the payment market and competition intensifies, card companies are forming alliances with fintech firms that have platform competitiveness. The network built through PLCCs is advantageous for securing future revenue sources 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.