Platform Card Recommendation Service Judged as 'Intermediation'... Card Companies Prepare Countermeasures (Comprehensive)

Review of Contract Change to Affiliate Recruiter Form
Service Disruption Unlikely

[Image source=Yonhap News]

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

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

Until now, card companies have partnered with fintech 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 users' information as intermediation during the sales process, improvements are needed before the end of the FCPA guidance period.

In fact, in the case of the platform's insurance comparison service, it was concluded to be an intermediation act, leading Kakao Pay to decide to operate its car insurance premium comparison and subscription service, which was conducted in partnership with six insurance companies including Hyundai Marine & Fire Insurance, DB Insurance, KB Insurance, Hana Insurance, AXA Insurance, and Carrot Insurance, only until the FCPA guidance period ends on the 24th. After the service suspension, the partnership will be maintained only in the form of banner advertisements.

Low Possibility of Service Suspension... But Ambiguities Remain

The card industry views the possibility of sudden service suspension as low. They are reviewing the option of changing contracts so that fintech companies providing card introduction services can offer services as partnership recruiters rather than advertising. 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 will be possible 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 proportion of credit cards issued through big tech platforms (large information and communication companies) has grown to one-third of the total online issuance in recent years.

An industry official said, "The possibility of new card issuance through platforms like Naver, Kakao, and Toss being suspended due to the enforcement of the FCPA is low. However, we are examining the process of changing existing advertising contracts to partnership recruitment contracts and whether there are any difficulties in that process."

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