Card Company Open Banking Service to Start from May

Contribution Payment Completed Last Month
Service Scheduled Around May After Computer System Development

[Asia Economy Reporter Ki Ha-young] Card companies will officially launch open banking services starting in May.

According to the industry on the 10th, card companies are accelerating system development with the goal of opening open banking services in May. The contribution fees for participating in open banking were paid at the end of last month. Financial institutions other than banks must pay a special participation fee to the Korea Financial Telecommunications and Clearings Institute (KFTC) to use the open banking network, and the special participation fee for card companies is known to be between 400 million and 1.2 billion KRW, similar to that of mutual finance and securities companies.

Open banking is a type of financial shared network. It is a joint payment system that allows users to check all bank accounts, transfer money, and make payments through a single application (app), and was fully implemented in December 2019. Initially limited to banks and fintech companies as participating institutions, the Financial Services Commission expanded participation to secondary financial institutions, enabling card companies to join.

Financial institutions that can use open banking must have accounts, but in December last year, the KFTC added information providers to the open banking system, allowing card companies to provide customers' card usage information instead of accounts.

By participating in open banking, card companies can use the open banking network for card payment withdrawals and merchant payment transfers at low fees. It is also expected to accelerate the development of future growth areas such as MyData and MyPayment services. Facing profitability deterioration due to reduced main revenue sources such as merchant fee reductions, card companies are preparing to expand their business scope to comprehensive payment services in line with the digital era, beyond MyData and MyPayment businesses.

An industry official said, "Most of the basic preparations for open banking participation, such as institutional improvements and contribution fee burdens for card companies without accounts, have been completed," adding, "After developing the IT system and conducting several checks, we are preparing to start the service by the end of May."