"Catch the Homebody Tribe"... Card Companies Compete to Attract Untact Consumption (Comprehensive)

[Asia Economy Reporter Ki Ha-young]#. Yu Hee-jin (42), a dual-income housewife from the 'DINK' group, has been doing 90% of her shopping online or via mobile since the outbreak of COVID-19. She receives early morning deliveries of groceries and other food items through Market Kurly, and most of her meals are ordered through delivery apps like Baedal Minjok. She hardly dares to go out, spending most of her time at home reading or watching movies. She subscribes to books regularly and uses Netflix for movies and dramas. Ms. Yu said, "Since most consumption happens at home, I started looking for credit card benefits related to untact (contactless) services, which I wasn't interested in before," adding, "I mainly use cards that offer discounts on delivery apps and real-time online video (OTT) services."

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As untact consumption culture spreads due to COVID-19, credit card companies have begun targeting the 'stay-at-home' crowd. They are actively attracting customers by launching new products aimed at untact consumption or renewing existing products with added related benefits.

According to the industry on the 11th, Lotte Card re-released the discontinued Lotte Like It Fun on the 1st as 'Like It Fun Plus.' The renewal focuses on untact. It added a 5% discount on delivery apps and offers an additional 10% benefit when using easy payment at Starbucks, allowing discounts of up to 60%.

Samsung Card also revamped its existing 'American Express Blue' card to strengthen untact consumption benefits. It offers 7% point accumulation on convenience store and delivery app payments, and 5% on transportation and telecommunications payments. It also provides 1.5% point accumulation on easy payments.

Hyundai Card renewed 'Hyundai Card Zero' to 'Zero Edition 2' in May. It offers 1.5% discount (discount type) or 2.5% M-point accumulation (point type) on payments in specialized areas reflecting untact consumption culture, such as seven major online easy payment services, ten major online shopping malls, and social commerce.

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New cards released this year have also flooded the market with products targeting untact consumption, reflecting changes in consumption and payment patterns due to COVID-19. Samsung Card launched three digital-specialized products on the 3rd. Among them, 'Tap Tap Digital' offers a 5% discount and up to 20,000 KRW payment day discount based on the previous month's usage when paying at domestic online merchants using Samsung Pay, Naver Pay, Kakao Pay, Payco, Smile Pay, and others.

The 'Shinhan Card YaY' launched in the first half of the year targets the home economy (home + economy) and untact consumption market. It features the industry's first 'Mariage' service, which provides benefits when using OTT services and food delivery services together. KB Kookmin Card introduced the 'KB Kookmin Easy All Card,' which allows customers to design their desired discount benefits and limits among 20 discount areas and freely restructure the benefit structure monthly. It offers discounts up to 48,000 KRW per month. Hyundai Card launched 'Digital Lover,' which offers up to 10,000 KRW monthly discounts on digital streaming services like Netflix and YouTube Premium. Easy payment services also provide a 5% discount on payment amounts up to 10,000 KRW monthly.

Woori Card even reflected untact in the card name with 'Card of Principles Untact.' It combines discounts on more than five regular payments and easy payment discounts simultaneously. It raised the discount rate to 20% for five popular sectors including Netflix. The number of regular payment merchants is as many as 32. Hana Card also started with the mobile-only 'Everyone's Shopping' card, which offers 5-10% basic accumulation in online and offline shopping sectors, and continues to release cards targeting untact consumption.

Since the spread of COVID-19, online shopping transaction amounts have increased sharply. According to Statistics Korea's 'Online Shopping Trends in July 2020,' online shopping transaction amount in July this year was 12.9625 trillion KRW, an increase of 1.7653 trillion KRW (15.8%) from 11.1973 trillion KRW in the same month last year. This is the highest monthly figure since online shopping statistics began. Among online shopping transactions, mobile shopping transactions amounted to 8.7833 trillion KRW, a 21.2% increase from the same month last year. The share of mobile shopping in total online shopping rose by 3.1 percentage points to 67.8% compared to the same month last year.

Looking at the proportion of online product transactions (excluding service transactions such as travel and transportation services) in total retail sales, it increased from 21.4% annually last year to 25.4% in May, 25.7% in June, and 26.6% in July this year, showing a steady rise. This means about one-quarter of total product consumption is done online.

An industry official said, "As consumption patterns changed due to COVID-19, such as the expansion of easy payments, new products responding to this have been released," adding, "Cards launched this year commonly include services like online shopping, delivery apps, and OTT."

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