[Ki Ha-young's Life Card] Naver and Kakao Exclusive Cards... Who Will Smile in the Market?

KakaoPay PLCC Scheduled for Launch in May
Naver PLCC Planned for Second Half of This Year

Is there anyone these days without at least one credit card? In modern society, anyone can have a card if they want. Credit cards have brought unparalleled convenience to daily life. Now, wherever you go, you can easily see people paying with credit cards or smartphones. As demand has increased, cards with various benefits are being released almost daily. In response, Asia Economy delivers diverse stories related to cards?an inseparable part of our consumer life?through its weekly 'Cards in Daily Life' corner, covering everything from new card introductions and industry insider stories to guides for card beginners.

Naver and KakaoPay exclusive cards will be launched sequentially in the first and second halves of this year. Naver is partnering with Hyundai Card, and KakaoPay with Samsung Card, to introduce private label credit cards (PLCCs). Not only is this a competition between Naver and Kakao, but also Samsung Card, which had not previously entered the PLCC market, has thrown its hat in the ring, raising industry-wide interest in the outcome of the competition between Samsung Card and Hyundai Card.

The first to hit the market will be the KakaoPay Samsung Card. Samsung Card plans to launch the KakaoPay PLCC in May. The card will offer benefits specialized in KakaoPay Points earned when using KakaoPay, designed so that users receive more benefits when using Kakao’s main services such as gift sending, taxi, Melon, and Webtoon. KakaoPay payments can be used at about 600,000 online and offline merchants, and KakaoPay Points can be used as cash for online payments.

The Naver Hyundai Card is scheduled for release in the second half of this year. Hyundai Card plans to launch a Naver Plus Membership-specialized PLCC in partnership with Naver. Naver Plus Membership is a subscription service costing 3,900 KRW per month (annual subscription basis) that offers 5% points back when paying with Naver Pay. It has grown rapidly, with about 2.5 million members joining within six months of launch. Consumers who frequently use Naver Shopping may be attracted to the Naver PLCC, which enhances the benefits of the Naver Plus Membership.

PLCC Success Depends on Differentiated 'Consumer Benefits'

PLCCs are cards created through collaboration between partner companies such as retailers and credit card companies. Unlike co-branded cards, PLCCs involve joint sharing of costs and revenues between the partner and the card company. Co-branded cards are fully designed and operated by the card company, which provides additional services to customers using its own resources, but PLCCs share card design, costs, and revenues jointly with the partner company.

From the card company’s perspective, sharing business costs reduces initial investment risks and allows them to secure loyal customers of the partner company. However, since profits are also shared, the net income tends to decrease over time, which is a downside. The partner company can increase sales, reduce costs, and conduct various marketing activities through the PLCC. From the consumer’s point of view, explanations of PLCC benefits vary slightly by card company. Some say there is little difference in benefits between co-branded cards and PLCCs, while others explain that because product design and costs are jointly borne with the partner company, PLCCs offer more focused benefits from the partner company than co-branded cards.

Ultimately, the success of the Naver and KakaoPay exclusive cards is expected to depend on how well they can provide differentiated benefits to consumers. There are PLCCs that, upon launch, only shine briefly with ambiguous benefits and then are ignored by consumers. It will be interesting to see what unique benefits will capture the hearts of 35 million KakaoPay users and 28 million Naver Pay users.