600 Card Types Discontinued Over 3 Years... "Focus on Phasing Out Premium Cards"

Profitability Declines Due to Fee Rate Reduction
Issuance Halted for Cost-Cutting Reasons
Includes Steady Sellers and Premium Cards
New Cards Increased but Benefits Disappointing

[Asia Economy Reporter Ki Ha-young] It has been revealed that about 600 types of cards have disappeared from the market over the past three years. Since the fee rate was recalculated in 2018, credit card companies facing deteriorating profitability due to additional fee rate cuts have stopped issuing existing cards for reasons such as cost reduction. Among the discontinued cards were steady sellers and so-called premium cards, raising concerns that consumer benefits are gradually decreasing.

According to the card industry on the 22nd, as of the 15th of this month, a total of 192 discontinued cards (143 credit cards and 49 check cards) were recorded from eight full-service card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana, BC). This figure is close to last year's discontinued cards, which numbered 202 (157 credit cards and 45 check cards).

About 200 types of cards have disappeared from the market each year over the past three years. In particular, the number of discontinued cards is increasing in conjunction with the reduction of merchant fees. The number of discontinued credit and check cards was 93 in 2017, 100 in 2018, and doubled to 202 each in 2019 and last year, when the merchant fee reduction was applied.

The discontinued cards included long-loved steady sellers and premium cards. Shinhan Card stopped selling the 'Lady Card,' which was launched during the LG Card era and had been popular for 20 years, in July. Last year, the 'Emart KB Kookmin Card,' which was popular as a so-called Gulbi Card sharing performance and annual fees with other cards, and the 'Payco X Lotte Card,' which could accumulate up to 300,000 points per month, were discontinued, causing disappointment among consumers.

On the other hand, a total of 232 new cards (199 credit cards and 33 check cards) were issued this year, marking the highest number of new products released in the past five years. The number of new credit and check cards was 165 in 2017, 131 in 2018, 91 in 2019, and 183 in 2020, showing an increasing trend again since last year. Although products following the latest trends, such as private label credit cards (PLCC), are being launched according to changes in consumer patterns, consumers have expressed dissatisfaction that the revamped cards offer fewer benefits than before.

This trend of card discontinuation is rooted in deteriorating profitability due to the reduction of merchant fees, which is the core business. According to the Financial Supervisory Service's Financial Statistics Information System, the merchant fee revenue of the eight full-service card companies, which was the main source of income for card companies, recorded 3.7359 trillion won cumulatively in the second quarter of this year. This is nearly half compared to 5.9543 trillion won in the second quarter of 2018 before the merchant fee adjustment.

Discontinued cards are expected to increase, and consumer benefits are likely to decrease further. This is because there is a strong possibility of additional cuts in the merchant fee rate recalculation scheduled for the end of this year. Since last year, the introduction of the 'Profitability Analysis System Guideline,' which allows card companies to release only products that can generate profits over the next five years based on profitability analysis, has also discouraged the issuance of high-cost cards with many benefits.

An industry official said, "If merchant fees are cut again, card companies will have no choice but to reduce costs," adding, "Ultimately, this means that the benefits returned to consumers, such as card perks, will decrease."

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