40% of Credit Cards Issued Online in First Half of Year... Expected to Account for Half by Year-End (Comprehensive)

Rapid Growth of Non-Face-to-Face Channels Due to COVID-19
Expected to Approach 50% by the End of This Year

[Image source=AP Yonhap News]

[Asia Economy Reporter Ki Ha-young] #. Office worker Lee Yoo-jung (31) recently issued a credit card through Toss. After issuing a new card, if she spends more than 100,000 won, she receives 100,000 Toss Points, and she can get an additional 20,000 Toss Points upon meeting certain conditions. She issued a card with an annual fee of 10,000 won and enjoyed a total cashback benefit of 120,000 won. She said, "In the past, I sometimes received card agent recommendations through online communities, but these days I get credit cards through Toss, KakaoPay, Naver Pay, and others," adding, "Issuance is simple, and the cashback amount is quite substantial, so I keep an eye on online card issuance events."

The proportion of credit cards issued online exceeded 40% in the first half of this year. At this pace, it is expected that nearly half of new credit card issuances will be done online by the end of this year. While this is an unstoppable trend, voices of concern are emerging in the card industry about dependence on big tech (large information and communication companies) platforms in line with the increase in online issuance.

42.6% Share of Online Channel Issuance in the First Half of This Year

According to data compiled from seven specialized card companies on the 20th, the proportion of newly issued credit cards online in the first half of this year was 42.6%, an increase of 5.6 percentage points compared to the end of last year. At this rate, the share of new online credit card issuances is expected to approach 50% by the end of this year.

The proportion of online credit card issuances has been increasing over the past five years. The share of online new issuances, which was only 6.3% in 2015, recorded double digits (12.7%) for the first time in 2017, then expanded annually to 17.8% in 2018, 26.6% in 2019, and 37.0% in 2020.

Especially last year, with the spread of non-face-to-face culture due to COVID-19, online issuances surged. The proportion of credit card applications through online channels last year increased by 10.4 percentage points compared to the end of the previous year, the largest increase in the past five years.

As non-face-to-face issuance increases, the number of card agents responsible for offline issuance is rapidly decreasing. According to the Korea Federation of Credit Finance Companies, the number of card agents at the seven specialized card companies was 8,673 as of the end of July this year. This is a decrease of 544 (5.9%) compared to 9,217 at the end of last year. The number has been steadily declining since it fell below 10,000 last year. The number of card agents, which reached 20,289 in 2015, was recorded as 16,658 in 2017, 12,607 in 2018, 11,382 in 2019, and 9,217 in 2020, shrinking to about one-third over six years.

An industry official said, "Due to COVID-19, face-to-face sales became difficult, and the number of people issuing cards offline, such as card agents and banks, decreased," adding, "The share of online issuance in total new card issuances had been gradually increasing, but COVID-19 accelerated this trend."

Big Tech Platform Influence Rises with Online Channel Growth

Online issuance channels include not only card company websites and applications (apps) but also portal sites like Naver and Daum, as well as big tech platforms such as Toss, Naver Pay, and KakaoPay. While offline channels through card agents are illegal if they offer benefits exceeding 10% of the annual fee, online channels can return benefits to customers up to 100% of the annual fee. This explains why online channel issuance is increasing, especially among the 20s and 30s age group.

Card companies are partnering with big tech to conduct marketing on online channels to attract new card issuances, but they are concerned about the growing influence of big tech platforms. It is known that in recent years, the proportion of credit cards issued through big tech platforms has grown to account for about one-third of all online issuances.

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