Samsung, Hyundai, Shinhan in campaign to attract more customers
Credit card companies are fighting another marketing war despite financial regulators’ warnings against signing up too many customers.
The industry’s big three ― Shinhan Card, Hyundai Card and Samsung Card ― have taken the initiative in the issuance competition. Other companies, such as KB Kookmin, Lotte and Hana-SK, are set to follow the move.
In particular, Samsung Card, the third-largest issuer, has been aggressive in developing new products under its reported strategy to overtake Hyundai Card, the nation’s No. 2 player.
Samsung Card is moving to launch a “number series” such as Samsung Card 2 and Samsung Card 3 Plus. The new lineup will include products numbered from 1 to 7.
Each product will likely be diversified to target specific consumers such as female cardholders in their 20s or middle-aged male drivers.
Hyundai Card will attract customers to the “Hyundai Card Zero” which offers discount services with no conditions from Monday. All customers of the product are allowed to enjoy a 0.7 percent discount.
The card provides holders with an extra discount of 0.5 percent when they use it at restaurants, coffee shops, large discount chains and convenience stores.
Shinhan Card, the nation’s largest issuer, has been active in attracting customers for mobile phone settlement-based credit cards by developing products in tie-ups with SK Telecom, KT and LG Telecom.
Credit card firms saw their combined assets, including insolvent loans, reach 76.6 trillion ($66.6 billion) won at the end of June, up 1.2 percent from 75.6 trillion won at the end of 2010.
Regulators are closely monitoring the situation as the figure has approached the critical level of 78.9 trillion won at the end of 2003 when the nation suffered a credit card fiasco.
Since the second quarter of the year, the FSS has inspected six major credit card issuers for excessive sales competition.
In the wake of their excessive business expansion mode, the regulator has obliged them to set their own guidelines, curbing expansion, in three major business sectors ― company assets, issuance of cards and costs for promotion activities.
Companies failing to meet the guidelines ― or which surpass the growth limit at certain times ― will be subject to a special regulatory probe.
The FSS also plans to introduce a new regulation on the ratio of total assets to equity capital in the credit card industry.
Under the coming regulation, companies may be banned from issuing corporate bonds far beyond their equity capital.
The FSS is considering issuing sanctions on several companies for irregularities including reckless issuance of credit cards. The regulator could also penalize their CEOs under their earlier commitment.
By Kim Yon-se (firstname.lastname@example.org