1Q Card Approval Amount Up 8.7%... Card Companies' Marketing Also 'Active' as Consumer Sentiment Recovers (Comprehensive)

Private Consumption Up 1.1% in Q1 This Year
Consumption Revives
Card Companies Expand Marketing with Partners

[Image source=Yonhap News]

[Asia Economy Reporter Ki Ha-young] As consumer sentiment suppressed by COVID-19 revives, credit card companies' marketing activities are also gaining momentum again. This is a different atmosphere compared to last year when social distancing measures were strengthened and consumption was restrained. However, some predict that it will not be easy to expand marketing to offline channels due to the authorities' recommendations to restrain marketing over the past few years and the rapidly increasing number of confirmed cases.

According to the '2021 Q1 Card Approval Performance Analysis' released by the Credit Finance Association on the 29th, the total card approval amount in the first quarter of this year was 223.8 trillion KRW, an increase of 8.7% compared to the previous year. The number of approvals during the same period also rose by 3.3% to 5.2 billion transactions compared to last year. This shows a clear improvement compared to the 1.7% increase in approval amount in the fourth quarter of last year. The Credit Finance Association analyzed, "There was a base effect due to the relatively sluggish increase in card approval amounts in the first quarter of last year," and "Overall consumption recovery appeared due to the slowdown in the third wave of COVID-19 and the easing of social distancing levels."

As consumer sentiment revives, credit card companies are expanding their marketing activities. Each card company is collaborating with various partners to launch diverse promotions. Hyundai Card recently planned an event offering charter flight boarding opportunities for members of the Korean Air Card to celebrate the first anniversary of its launch. Shinhan Card is running room events at Lotte Hotel & Resort. Samsung Card has also introduced special hotel room promotions at The Plaza and Conrad Seoul.

An industry insider said, "Compared to last year when activities were restrained due to COVID-19, marketing is becoming more active," and added, "We are planning various marketing campaigns not only online but also with partners such as department stores and convenience stores."

Q1 Card Approval Amount Up 8.7% YoY... Clear Signs of Consumption Recovery

Various consumption indicators also show a favorable trend. According to the Bank of Korea, private consumption in the first quarter of this year increased by 1.1% due to higher consumption of passenger cars, home appliances, and food and beverages. This is a clear recovery compared to the third quarter (0.0%) and fourth quarter (-1.5%) of last year.

The Consumer Sentiment Index has also risen for four consecutive months. According to the Bank of Korea's April Consumer Survey results, the Consumer Sentiment Index (CCSI) in April was 102.2, up 1.7 points from the previous month. It has exceeded 100 for two consecutive months following last month.

With Family Month approaching next month, events are expected to become even more diverse. May is considered a major marketing season following the Lunar New Year and Chuseok holidays. This is because demand for gifts increases for occasions such as Children's Day and Parents' Day. For credit card companies, this is an opportunity to increase card payment amounts.

However, there is also a cautious view that it is too early to consider this a full-fledged consumption recovery. Another industry insider said, "The number of confirmed cases is approaching 800 again, and overseas travel demand has not yet recovered," adding, "As in last year, events related to online shopping and overseas direct purchases will be active, but it will be difficult to expand marketing to offline channels."

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