Polarization in Card Company Market Share... Gap Widens Between Large and Small-Medium Firms (Comprehensive)

3x Gap in Market Share Between 1st and 7th
Growing Influence of Simple Payment Providers
Shaking the Position of Small and Mid-Sized Card Companies

[Asia Economy Reporter Ki Ha-young] The gap in market share between large and small-to-medium-sized credit card companies has become entrenched. While the second-tier card companies have narrowed the gap with the top player this year, the mid- and lower-tier card companies struggled as they lost market share. Moreover, with big tech companies leveraging easy payment services to expand transaction volumes, there are growing concerns that the position of small-to-medium-sized card companies will become even more constrained in the future.

According to the Financial Supervisory Service’s Financial Statistics Information System on the 27th, based on total credit sales (excluding corporate purchases, including individual and corporate) for the third quarter of this year, the market share gap between the top-ranked Shinhan Card and the seventh-ranked Hana Card among the seven specialized card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana) reached about three times.

Shinhan Card maintained its unshakable first place with a market share of 21.45% in the third quarter. Among the ongoing competition for second place, Samsung Card’s strong performance stands out. Samsung Card, which has increased individual credit sales this year and solidified its second place, recorded a market share of 18.96%, narrowing the gap with the first place to 2.49 percentage points. This is 0.18 percentage points closer than the gap in the second quarter, which was the lowest since the first quarter of 2017. KB Kookmin Card and Hyundai Card maintained third and fourth places with 17.59% and 16.51%, respectively.

For small-to-medium-sized card companies such as Lotte, Woori, and Hana Card, rankings remained the same but market shares declined. Hana Card, ranked seventh, showed the largest decrease among the seven specialized card companies, dropping 0.6 percentage points from the previous quarter to 7.26%. During the same period, Lotte Card’s market share fell by 0.05 percentage points to 9.34%, maintaining fifth place, while Woori Card rose 0.12 percentage points to 8.89%, holding sixth place.

Up to 3 Times Difference... Small-to-Medium Card Companies Struggle to Find a Breakthrough

The market share gap, ranging from at least twice to up to three times, has been widening year by year. While the top-ranked Shinhan Card maintains a 21-22% share, Samsung, KB Kookmin, and Shinhan Cards occupy the 16-18% range, and Lotte, Woori, and Hana Cards hold the 7-9% range, solidifying this structure. This indicates a deepening polarization among card companies.

Furthermore, big tech companies such as Naver Pay and Kakao Pay have expanded their influence centered on easy payment services, shaking the position of small-to-medium-sized card companies. According to Korea Credit Rating, as of the third quarter, Naver Pay’s transaction volume (9.8 trillion KRW) nearly matched the average transaction volume of small card companies (Lotte, Woori, Hana Card) at 10.7 trillion KRW. Woori Card’s plan to build its own merchant network and Lotte Card’s transformation into a digital company are interpreted as desperate attempts by small-to-medium-sized card companies to overcome this environment.

Starting next year, with card merchant fees being reduced by up to 0.3 percentage points, there are concerns that the resulting decline in profitability could lead to a drop in market share for small-to-medium-sized card companies. If marketing expenses are cut to maintain profitability, the benefits returned to customers will inevitably shrink, potentially leading to a decrease in users.

An industry insider said, "Credit card market share fluctuates greatly depending on marketing efforts. As the intensity of cutthroat competition has decreased compared to before, market shares have become entrenched, and the position of small-to-medium-sized card companies is becoming even narrower."

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