Card Companies Partnering with Fintech, an 'Alliance with the Enemy' for 2030 Generation

KakaoBank Partners with Toss and Others
Introducing Co-branded Cards and PLCCs

[Asia Economy Reporter Ki Ha-young] Credit card companies are willing to 'sleep with the enemy' to survive. Facing deteriorating profitability due to merchant fee reductions, credit card companies are strengthening alliances with fintech firms to find breakthroughs for customer acquisition. Although fintech companies have emerged as competitors due to various regulatory relaxations, collaboration is expected to expand further amid the rapid growth of the related market.

According to the industry on the 28th, Shinhan, Samsung, KB Kookmin, and Citi Card jointly launched co-branded cards in partnership with KakaoBank. Customers can choose each card company's products on the KakaoBank mobile platform. The benefits also vary by card company. Shinhan Card introduced the industry's first usage frequency-based cashback service, Samsung Card promoted a low annual fee of 7,000 KRW with no monthly spending conditions or limits on discounts, and KB Kookmin Card enhanced benefits in preferred sectors for the 20s and 30s generation such as simple payments, convenience stores, and delivery applications.

Earlier this month, Hana Card partnered with Viva Republica, which operates the mobile financial service Toss, to launch a private label credit card (PLCC). Toss handles product planning and sales of the card, while Hana Card operates the payment network. Pre-orders were accepted from the 9th to the 22nd of last month, reaching 200,000 reservations.

Credit card companies are partnering with fintech firms to secure potential customers. KakaoBank has about 12 million customers, especially many young customers in their 20s and 30s due to its nature as an internet bank platform. Toss also has about 16 million subscribers.

For fintech companies, they can attract members through bold marketing that credit card companies cannot do. In the case of the Toss credit card, the benefits available for three months after registration caught consumers' attention. If the previous month's usage and additional conditions are met, up to 3% cashback on payment amounts is provided within a monthly limit of 100,000 KRW.

With the expansion of non-face-to-face payments, credit card companies are also broadening their customer base through partnerships with simple payment service providers. According to the Bank of Korea, at the end of last year, the average daily usage of card-based simple payment services was 6.02 million transactions and 174.5 billion KRW, increasing by 56.6% and 44.0% respectively compared to the previous year. Woori Card recently launched the 'Naver Pay Woori Card Check' that accumulates 1% of usage amounts as Naver Pay points. Naver Pay's transaction volume surged by more than 40% year-on-year in the first quarter due to increased online shopping.

An industry official said, "In the stagnant card industry, cooperation with fintech companies continues to secure customers," adding, "Especially, cooperating with fintech companies is advantageous in targeting the potential customer base of the 20s and 30s generation."