[Viewpoint] Credit Card Companies' Consulting for the Self-Employed: Urgent Need for Big Data Utilization

Seo Ji-yong, Professor, Department of Business Administration, Sangmyung University

Recently, the resurgence of the novel coronavirus infection (COVID-19) has made the self-employed business environment extremely difficult. Considering the characteristics of our labor market, where the proportion of self-employed is higher compared to OECD countries, the negative impact on the national economy is a cause for concern. This is because about 27% of employed persons in Korea are self-employed, compared to an average of 15% in OECD countries. Recently, the card approval amount, which estimates self-employed income, has been decreasing. The Ministry of Economy and Finance announced that restaurant card sales in the first week of September fell by 28.4% compared to the same period last year. Although a second disaster relief fund was announced for self-employed people who suffered sales damage due to COVID-19, the 2 million won, which only covers 1 to 2 months of rent, does not seem sufficient to overcome the sluggish self-employed business conditions. Fundamental support policies for the self-employed are necessary.

However, recently, consulting services for the self-employed by credit card companies have become more concrete, attracting attention. In fact, there have been financial institution consultations aimed at increasing self-employed sales in the past. But these were mostly limited to general mass big data consulting such as commercial district analysis. There was not much marketing information provided that suggested consumer-preferred products, purchase locations, or consumption timing that could help self-employed sales. Recently, domestic credit card companies are promoting big data utilization consulting for the self-employed as part of preparing for the MyData business. The main contents include services that provide information to customers likely to use it when registering additional benefits that merchants offer to customers, and services that classify customer consumption tendencies to recommend customized merchants to customers.

Already, overseas credit card companies are conducting various big data marketing to induce consumer purchases. Visa offers a service called Real Time Messaging that sends coupons to consumers for products they are likely to purchase by analyzing consumer purchase history and tendencies. Amex also provides discount benefit information to consumers likely to purchase through the Amex Sync program, which utilizes location-based social network information. Mastercard has long been promoting a business that sells customer analysis data using big data to merchants. By 2014, the proportion of data sales revenue had already exceeded the payment transaction revenue proportion, at 22% compared to 14%.

Compared to other financial institutions, credit card companies are well-positioned to help boost merchant sales. Most self-employed businesses are credit card merchants. This is because the Enforcement Decree of the Income Tax Act Article 210-3 mandates merchant membership. In other words, businesses with total revenue of 24 million won or more in the previous tax period in consumer-facing industries are required to join as credit card merchants. Accordingly, the support services of credit card companies, which have secured merchant sales and consumer information, are effective. Credit card companies have been operating big data centers and possess advanced big data analysis techniques. The passage of the Data 3 Act this year has also increased the possibility of utilizing card payment data, which is effective for supporting the self-employed. Data utilization is now possible with comprehensive customer consent rather than on a case-by-case basis, and the standards for allowing anonymized information have been specified, enabling accurate customer and commercial district analysis. In particular, some credit card companies’ parent companies are telecommunications firms. Many credit card companies have secured non-financial data such as telecommunications information. Data sharing across industries makes it possible to provide marketing information that can help increase sales. When telecommunications information is reflected in card payment data, consumer movement can be tracked, enabling marketing targeting floating populations to boost self-employed sales.

Ultimately, government support measures are needed so that self-employed businesses can receive these services at low cost. Expansion of pilot projects to support big data consulting for the self-employed is necessary. Recently, some credit card companies were selected for MyData pilot projects, including management consulting pilot projects. In the future, through the expansion of various pilot projects to support the self-employed, participation of credit card companies in self-employed consulting should be encouraged. Also, considering the performance of self-employed consulting support, priority selection rights for MyData business licensing should be considered. In conclusion, the government should spare no support to activate credit card companies’ self-employed consulting services that can increase self-employed sales.

[Seo Ji-yong, Professor, Department of Business Administration, Sangmyung University]