Platform Card Recommendation Service Judged as 'Intermediation'... Card Companies Also Prepare Countermeasures

Review of Contract Change to Affiliate Recruiter Form
Service Disruption Unlikely

[Asia Economy Reporter Ki Ha-young] Financial authorities view fintech companies' introduction or recommendation of financial products not as 'advertising' but as 'intermediation,' a type of sales method, prompting the card industry to prepare countermeasures. Although the recruitment of new customers through fintech will not be immediately halted, it is expected that there will be limited time to complete institutional improvements by the 24th, when the Financial Consumer Protection Act (FCPA) guidance period ends.

According to the card industry on the 15th, on the 13th, the Credit Finance Association and card company officials discussed the partnership status with fintech companies. This follows the financial authorities' judgment that fintech companies' acts of introducing or recommending financial products are intermediation rather than advertising.

Until now, card companies have partnered with fintech firms in the form of advertising and recruited new customers through fintech platforms. However, as financial authorities recognize the sales method of recommending suitable credit cards based on platform subscribers' information as intermediation during the sales process, improvements are required by the 24th, when the FCPA guidance period ends.

The industry believes the possibility of sudden service suspension is low. They are reviewing ways to change contracts so that fintech companies providing card introduction services can operate as partnership recruiters rather than advertisers. According to the Specialized Credit Finance Business Act, card recruiters are exclusive to one company, but partnership recruiters are an exception. If fintech companies sign partnership contracts with card companies and become partnership recruiters, recommendation intermediation can continue as before.

However, some ambiguities remain. A typical example is when credit cards are searched and applied for through portals like Naver or Daum. While customized credit card recommendations have been judged as intermediation, it is unclear whether this case should be considered advertising or intermediation. The Credit Finance Association is expected to collect such industry opinions and seek interpretation from financial authorities.

Online credit card issuance has surged over the past five years. The proportion of new online issuances, which was only 6.3% in 2015, grew about sevenfold to 42.6% in the first half of this year. It is also reported that the share of credit cards issued through big tech platforms has grown to one-third of the total online issuance proportion in recent years.

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