Fashion
Local credit card companies are launching offline-to-online (O2O) service businesses by collaborating with various sectors to increase transaction fee income.
KB Kookmin Card reached an agreement with Uber Korea on Monday to jointly develop card products and take part in joint promotion campaigns in and outside Korea.
“We hope to offer a wider variety of membership benefits to our credit card customers and expand in new sharing economy businesses like Uber,” said Shin Seong-hoon, head of the marketing division of KB Kookmin Card.
The joint venture not only helps Uber expand its customer base in Korea against competition with Kakao Taxi, but also assists Kookmin Card to seek a future growth engine by developing taxi reservation services that are offered in association with credit card membership benefits. It may allow Kookman Card to expand its payment service to 400 cities where Uber operates.
KB Kookmin Card is not alone moving towards such services.
Shinhan Card has collaborated with four companies, including Kyobo Bookstore, GS Retail, Korea Smart Card and the car sharing service start-up Socar, since last year to offer O2O services and foster a loyal customer base.
Shinhan also plans to launch a chauffer service this month in Seoul and Gyeonggi by affiliating with existing dispatch companies. It profits from a transaction fee of 2 to 2.5 percent.
It also has been offering an easy payment services on flower delivery, quick-delivery and tutoring payment, after agreements with six companies.
Shinhan aims to expand the O2O services by joining hands with 14 more companies by the end of the year.
Local credit card companies aim to beef up their transaction fee income, which accounts for nearly 50 percent of their total annual income.
?However, analysts say it won’t be so easy for the credit card companies to grab market share by winning the competition with IT giants like Kakao and start-ups like Baedal Minjok, which have so far dominated the market share based on their broad customer base.
“It is true that the credit card companies also have a large customer base, as well as broad affiliated retail shop networks,” said Yoon Jong-moon, a researcher at the Credit Finance Research Institute. “However, such a network is not enough to compete against the IT platform operators, because the card companies will see only a limited growth in profits by doing O2O services among their own customers and affiliated shops.”
