Hyundai Card's 'Apple Pay' Effect Strong... Sustainability Is 'Uncertain'

Hyundai Card Ranks 2nd in Personal Credit Sales for 3 Consecutive Months
Also 2nd in New Credit Card Sign-ups Last Year
Card Companies Eye Apple Pay Adoption Amid High Fees

A customer is making a payment using Apple Pay at a coffee shop in Seoul.

Apple Pay, introduced to Korea last March, is shaking up the card industry landscape. Hyundai Card, which was ranked 4th in market share, has leveraged Apple Pay to rise to a level that threatens Samsung Card, the 2nd place holder. Other card companies are also considering adopting Apple Pay, but due to high fees and lack of infrastructure, they are still cautiously observing the situation.

According to the Credit Finance Association on the 25th, Hyundai Card ranked 2nd in personal credit sales volume for three consecutive months from October to December last year. Personal credit sales volume refers to the amount customers use for lump-sum or installment payments with credit cards domestically and internationally. It is an indicator used alongside the number of members to gauge market share. Last month, Hyundai Card recorded 11.093 trillion KRW in personal credit sales volume, even threatening the 1st place Shinhan Card (11.906 trillion KRW). Hyundai Card’s total personal credit sales volume for last year was 122.2553 trillion KRW, ranking 3rd behind Shinhan Card (140.686 trillion KRW) and Samsung Card (128.0728 trillion KRW).

Hyundai Card ranked 2nd among eight card companies last year in the number of new credit cards issued under the cardholder’s name. Last year, 1.504 million people (excluding corporations) newly issued Hyundai Card credit cards. Currently, Hyundai Card is the only domestic card company supporting Apple Pay, which likely contributed to the high number of new credit card issuances. The 1st place was KB Kookmin Card with 1.544 million issued cards. Samsung Card ranked 3rd with 1.372 million, and Shinhan Card was 4th with 1.261 million.

Industry insiders agree that Hyundai Card is reaping significant benefits from Apple Pay. With iPhone users accounting for 23% of the domestic market, Hyundai Card’s exclusive service supply brought both initial popularity and market preemption effects simultaneously.

However, the high fees are a burden for Hyundai Card. It is known that Hyundai Card currently pays Apple a 0.15% fee per Apple Pay transaction. This is significantly higher compared to major countries such as China (0.03%) and Israel (0.05%). Moreover, since many Apple Pay users are from the MZ generation (Millennials + Generation Z), who mainly make small payments, profitability is low. A card company official said, "In fact, looking at Apple Pay alone, Hyundai Card loses money on each transaction, but the idea is to attract subscribers and generate profits through other services like card loans," adding, "Hyundai Card accepted excessively high fees from the start, making it difficult for later card companies to easily enter the market."

It has been about 10 months since Apple Pay landed in Korea, but no other card company has announced plans to adopt Apple Pay. While Apple is known for its strict information security, this also means the cost-benefit balance is unfavorable. With card companies’ performance worsening due to increased funding costs from high interest rates, there is no room to aggressively push the business. Oh Tae-rok, a research fellow at the Korea Institute of Finance, explained, "The number of new card customers due to Apple Pay adoption increased initially but decreased in the latter half of the year," adding, "The effect of Apple Pay adoption on continuously increasing sales is limited."

Furthermore, many in the industry believe there is no need to rush until infrastructure is built because the transportation card function has not yet been added to Apple Pay for technical reasons. Apple Pay payments are made through terminals adopting the near-field communication (NFC) payment standard ‘EMV (Europay, Mastercard, Visa) contactless method.’ Changing terminals for domestic buses and subways to this standard requires enormous costs. Accordingly, Apple is cooperating with the domestic transportation card company T-money to conduct tests that allow transportation card use without terminal replacement through a technology compatibility method.

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